Tax Lien Sales

Date Filed: 02/16/2018

Imagine losing the home you’ve lived in for half your life, where you’ve raised your family and watched your neighbors do the same, and for which you have always paid the mortgage on time.  Impossible?  Not for far too many homeowners.  For decades, jurisdictions across the country have sold tax liens on properties with delinquent property taxes as a means to collect the debt owed – even when that debt is only a couple hundred dollars.  Each jurisdiction applies this system differently, but, generally, where there are delinquent property taxes, a local government may sell a tax lien on that property to a third party purchaser, who then has the right to collect the tax debt from the property owner, in addition to interest and fees. 

In Fall 2013, The Washington Post published an explosive investigative series  uncovering numerous flaws with the tax lien sales process in many jurisdictions. The investigation revealed that this system is being used to charge thousands of homeowners across the country outrageous fees to redeem their properties, with the result that many find themselves in foreclosure over what was originally a very small tax debt.  Furthermore, this practice has a disproportionate impact on African-Americans and the elderly – groups that were already hit hard by the foreclosure crisis.

LDF is concerned about abuses in tax lien systems, and is working to ensure that homeowners, and particularly homeowners of color, are not unfairly deprived of their homes.  In December 2013, LDF wrote a letter  to Washington, D.C., Mayor Vincent Gray and the D.C. Council, condemning the flaws in D.C.’s tax lien system and calling for specific reforms to protect vulnerable homeowners.  LDF wrote a similar letter to Cuyahoga County Executive Edward FitzGerald and the Cuyahoga County Council in March 2014, encouraging the council to impose a temporary moratorium on tax lien sales and to establish a task force to investigate the system and ensure that is used fairly.

LDF is closely examining these and other tax lien sales systems across the country and urging jurisdictions that use tax lien sales to collect delinquent taxes to do so in a manner that is fair, equitable, and transparent, and to advocate for reform in those jurisdictions where the system has a disproportionate impact on communities of color.