District of Columbia officials this week expressed indignation after a series of Washington Post stories, which claimed that the city’s property tax sales system has deprived some of its most vulnerable residents of their homes over miniscule debts.
But a local advocacy group said the outrage is more than a year too late.
In April 2012, AT HOME, the Alliance to Help Owners Maintain Equity, sent a letter addressed to Mayor Vincent C. Gray and Council Jack Evans, chairman of the D.C. Council’s Committee on Finance & Revenue, highlighting “several flaws” in the real property tax sale system.
“The current tax sale system’s problems cause economic hardship for homeowners, displace families (many of whom have lived in their homes for multiple generations) and burden communities already struggling to make ends meet,” the letter read.
But that warning was largely ignored, a spokeswoman said, and while legislation was introduced, it went nowhere.
On Sept. 9, in response to the Post’s reports, Mayor Vincent C. Gray and Councilmember Anita Bonds (Democrat At Large) proposed a moratorium on all property tax liens in the District. Bonds also requested that Gray and the D.C. Council establish guidelines on the tax lien system that will subsequently become law.
“I am deeply saddened and extremely upset that residents have lost their homes to these predatory buyers for as little as a $45.00 tax lien,” Bonds said in a statement. “As a member of the Council of the District of Columbia, I intend to do all I can to rectify these unsavory practices.”
In June, Bonds introduced legislation, the “Senior Citizen Real Property Tax Relief Act,” which seeks to exempt all property taxes for long-time homeowners aged 75 and older and earn less than $60,000 annually.
In an interview, Bonds, a resident of Bloomingdale, said she is concerned that some residents’ biggest investment, their property, is being threatened because they cannot to afford to pay taxes.
Amy Mix, supervising attorney at the Legal Counsel for the Elderly, an AARP-affiliated free legal service and a member of the AT HOME coalition, commended the legislators for moving, even at this late date.
“I’m happy to see that they mayor and council are showing outrage over this issue, but we wish we could have had some of that outrage since last year,” Mix said.
Some of the common problems in the system involved homeowners receiving faulty bills, residents not getting a response or getting wrong information from the Office of Tax and Revenue and inadequate or delayed post-sale notices.
More egregiously, Mix said, many of their clients were elderly and disabled homeowners who were losing their homes over negligible liens, some lower than $1,500, that became distended by exorbitant attorneys’ fees.
“The tax sale system is very predatory and one-sided, benefitting those out-of-town purchasers that come in, take up properties and flip them. The District only gets its taxes paid,” Mix said.
A spokesman for the Office of the Chief Financial Officer has disputed the characterization of its tax sale system, saying the examples cited by the Post occurred before 2008.
“Rules have been put in place to prevent these tragic events from happening and they have not happened again,” David Umansky told the AFRO. “The Post was not forthcoming in its stories because they did not say these problems happened then (before 2008) and they ignored the fact that these safeguards are in place now.”
Not only has the Office of Tax and Revenue increased the number of notices that are sent to those delinquent on their property taxes, but it also placed a $1,000 floor on the liens that could be auctioned, officials said.
This year, for example, out of the 4,000 properties listed as being negligent on their taxes, only 1,000 made it to the tax sale since 75 percent of those contacted paid their debt after receiving the notices.
Thirty-five of the remaining 1,000 were eliminated because their lien was lower than $1,000, and of the 965 properties that were eventually sold, 100 had homestead exemption, meaning mostly rental and commercial properties were sold, Umansky said.
“The impact on homeowners is going down because of the rules in place,” he said.
More can be done to strengthen protections for homeowners, Umansky added, such as capping attorneys’ fees. And, his agency is working with Evans and other council members, who are pushing emergency legislation that would place a $2,000 minimum on the liens sold and exempt senior citizens and the disabled from lien sales, among other changes.
Mix, the seniors advocate, said Umansky is giving his agency too much credit and mischaracterizing their motives.
“ $1,000 threshold exists, now because they didn’t want to see liens below $1,000, that threshold was created and changes each year based on OTR’s administrative capacity,” Mix said. “If they were caught up on their work, there wouldn’t be a threshold at all.”
Mix attributed any progress in the system to the “unintentional” effects of the threshold; the fairness of Judge Joseph E. Beshouri, who often refers defenseless seniors and the disabled to the Legal Counsel for the Elderly; and to the D.C. Bar Association, which has a resource center at the court to offer homeowners sound advice and help.
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