Tax Liens Will File in August

 

July 7, 2021

Owners of real estate are required to pay property taxes. Because these taxes fund various services provided by the government-services such as libraries, parks, road maintenance, and garbage collection-they are an important component of a city's and a county's budget. However, the list of Delinquent Taxes prepared by County Treasurer Tori MacLean DesRosier and submitted in June to the Board of County Commissioners was 92 pages long, with some properties delinquent since 1999.

This information came to light after a civic group in Harlem expressed concern about uncared for and dilapidated properties. Occasionally, such properties are abandoned by their owners because the cost to maintain or repair them exceeds their current value.

When a resident couple inquired about the possible purchase of such a property adjacent to theirs so that they could build a garage for additional storage, they learned about a tax penalty and interest that would have made purchase of the property cost prohibitive since the tax penalty and interest alone totaled $27,000.

Another concerned party claims that many of these properties have been stripped of anything valuable and now they are left to be an eyesore. If these neglected properties are purchased by civic-minded individuals who will clean them up, maybe even build improvements on them, the county can begin collecting revenue again.

According to DesRosier, Blaine County isn't in as dire a situation as the 92 pages might suggest. By July 1, the Delinquent Tax list had shrunk by nine pages. It is also important to note, that when that list is run without legal descriptions, the report is 37 pages. The Delinquent Tax report is generated with legal descriptions so that interested parties know where the property is located. Those descriptions add to the report's length.

In fact, only two percent of the taxes in Blaine County are uncollected, and only seven tax payers have taxes delinquent more than ten years. DesRosier said that she is trying to clean up the tax rolls, but the process takes time. "We have been in conversation about tax abatement and cleaning up the delinquent taxes fairly, but it's a complicated process. The issue is easier on paper than in reality since the county is not in the business to own other people's property, and taking tax deeds costs taxpayers' money," she explained. "We all want to see our cities thriving and looking welcoming, but we have to ensure that everyone is treated fairly and equally."

DesRosier recommends that someone wishing to buy a property on which taxes have been delinquent should enter in negotiation with the owner. "The county really can't mediate in such situations," she stated.

In statute, the treasurer can, however, write off delinquent taxes: "The board of county commissioners may enter an order that permanently and prospectively cancels real property taxes on parcels identified by the county treasurer (MCA Title 15-16-701 subsection 3). As an attempt at cleaning up the tax rolls, DesRosier recently met with County Commissioners seeking such an abatement for taxes delinquent for fifteen or more years.

The Blaine County Treasurer's office went on to share information that if a property owner fails to keep current on property taxes, the past-due amount becomes a lien on that individual's property. The lien acts as a legal claim against the property for the unpaid amount that is owed. Most states have laws that allow the local government to then sell property through a tax lien process to collect the delinquent taxes.

In 2019, Montana revised its tax lien and tax deed process for residential properties. The county treasurer can sell those liens-not the property itself-in the form of a "tax lien certificate" to a third party, called an "assignee." If a property owner doesn't get caught up on the overdue amounts before the redemption period expires, the assignee can apply for a deed to the property.

Once a tax lien has been sold, state law guarantees the holders of that lien a ten percent annual return on their investment – plus an additional two-percent per annum that goes to the county to cover administrative costs. If the owner of the property does not reimburse the lien holder for the entire amount of the accumulating debt within three years, then a tax deed is issued, turning ownership of the property over to the lien holder.

Property tax collection in Montana is unique in that it relies upon the profit motive of private individuals to enforce compliance. A property investment company can come in, pay the back taxes, and obtain a lien on the property attached to them. This situation leaves a person wondering who might be paying taxes under assignment and who might eventually become our neighbors.

To help property owners avoid delinquent taxes on real property and mobile homes, Blaine County sends a courtesy notice after the first half of property taxes become delinquent. After the second half of property taxes become delinquent, the Blaine County Treasurer places a notice in the Blaine County Journal-News-Opinion advising delinquent taxpayers about the possibility that a lien could be placed against their property, per Montana statute (MCA 15-17-123).

The notice must include a statement that the delinquent taxes, including penalties, interest, and costs, are a lien upon the property and that unless these amounts are paid before the specified date, a tax lien will attach to the home and may be assigned to a third party (MCA 15-17-122).

If the tax remains unpaid on the first working day in August (August 2 in 2021), the County Treasurer must attach a tax lien on the property and file the lien with the Blaine County Clerk and Recorder. A copy of the tax lien certificate is also sent to the recorded address for the property owner. Property owners can still make payment on their delinquent taxes, which will release the lien, up until an assignment has been taken. Once an assignment has been taken, the property owner will need to contact the Treasurer's Office for payment information and can do so by calling 357-3280.

If the taxes on such properties have not been received by the August deadline, an assignee can pay all taxes, penalty, interest, and costs. After the assignee has followed the steps outlined in statute, the lien from the County transfers to the assignee. In more populated counties where attractive properties go delinquent, investors line up at the court house hoping to become an assignee. These can be lucrative investments, earning 10% or more in interest.

The list of delinquent taxes is made available for inspection on the counter at the Blaine County Treasurer's Office in Chinook. Anyone wishing for a hard copy of the list can request it for .25/page, although an email copy will be sent free of charge.

The bottom line is that unless a property owner is diligent in paying his/her taxes, someone else can pick up that property. Blaine County attaches a tax lien to all real estate properties with delinquent taxes on the first working day of August. If you have delinquent taxes and need more information, please call (406) 357-3280. Anyone interested in tax lien assignments and tax deeds should consult an attorney.

 
 

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