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LDF Urges Changes to Cuyahoga County’s Property Tax Lien Sales System

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3/03/14

On March 3, 2014, LDF sent a letter to Edward FitzGerald, the County Executive of Cuyahoga County, Ohio, Jeannet Wright, Acting County Treasurer, and the members of the Cuyahoga County council urging them to make changes to Cuyahoga County’s property tax lien sales system. Tax lien sales are used by many jurisdictions across the country as a means to collect delinquent property taxes, and each jurisdiction applies this system differently.  In Cuyahoga County—home to the city of Cleveland—the County Treasurer, at her discretion, selects from a list any number of properties delinquent in their taxes, negotiates the sale of tax lien certificates, and sells the certificates in bulk to single purchaser.  That purchaser then may charge the delinquent homeowner interest and fees to redeem the lien, or, if the lien is not redeemed within 12 months, move to foreclose on the property.

In an explosive, three-part investigative series, The Washington Post uncovered a number of flaws with tax lien sales systems around the country—including in Cuyahoga County.  The reporters found that the tax lien sales process has morphed into a predatory debt collection system, led by aggressive third-party investors who charge outrageous fees and high interest rates that property owners must pay or risk losing their homes.  For example, Woods Cove II, a purchaser of tax lien certificates in Cuyahoga County, has been accused of engaging in questionable business practices designed to collect additional interest from property owners beyond what they owe, prompting Cuyahoga County Inspector General Nailah Byrd to announce in December 2013 that she is going to investigate the company.  Similarly, the Post reported that a company called Aeon Financial aggressively purchased tax liens and demanded high fees from property owners in several jurisdictions, including in Cuyahoga County, where Aeon ultimately foreclosed on hundreds of properties in predominantly African-American sections of Cleveland. Unable to sell and unwilling to maintain those properties, Aeon has allowed them to remain vacant and in disrepair, contributing to the blight of these neighborhoods.

In light of these facts, LDF, in our letter, calls on the Cuyahoga County Executive, Treasurer, and County Council to issue a temporary moratorium on tax lien certificate sales and to convene a task force to investigate the system. We also discussed the importance of transparency in the negotiation and sales process, and of ensuring that the property tax lien certificate sales system is fair and just to all homeowners.  Read LDF’s letter here.

LDF previously sent a similar letter to the Mayor of Washington, D.C., and the D.C. Council, asking them to make systemic changes to D.C.’s tax lien system to make it fairer and eliminate the disproportionate impact the system has on communities of color.