Post-death conflicts often arise, especially when a parent has gifted or loaned money to one child and not others. . .Read more
Elderly Losing Homes for Owing a Few Hundred Dollars in Back Taxes
- July 12th, 2012
In what a new report is calling “a second nationwide foreclosure crisis,” homeowners, particularly the elderly, are losing their homes because they owe as little as a few hundred dollars in back property taxes. At the same time, big banks and other investors are snatching up these homes for pennies on the dollar and reaping huge profits.
The blame, says the National Consumer Law Center (NCLC) in its groundbreaking report, lies with outdated state laws that permit local governments to sell property through a tax lien foreclosure process if the owner falls behind on property taxes, even if the homeowner owes as little as $400.
Local Elder Law Attorneys in Ashburn, VA
Ron M. Landsman, P.A.
Ron M. Landsman has been practicing elder law since 1983, before it was known as elder law, originally with Landsman and Laster, Washington, D.C., then Landsman, Eakes and Laster, also in Arlington, VA, and since 1990 in his own practice in Montgomery County, Maryland. He has been among the most active members of the...
Law Offices of John L. Laster
John Laster is a lawyer licensed to practice in Virginia, Maryland and the District of Columbia. He limits his practice to wealth transfer planning, trusts, wills, powers of attorney, health care decision-making issues, estate administration and related tax, elder law and disability concerns. Listed in The Best Lawyers...
Hammond and Associates, LLC, Elder Law, Estate Planning, Wills, Trusts, Probate
For Jeffrey Hammond, the practice of Elder Law is personal. Jeff’s many years of experience in law and in business did not prepare him for the crisis he faced in 2005 and 2006 when his father suffered a stroke and both of his parents suffered from dementia and other medical problems. At that time, Jeff began an i...
When a home is foreclosed on for back taxes, banks or speculators responding to “get-rich-quick” Internet schemes swoop in to buy the tax lien. The homeowner has a limited time to redeem their property by paying the investors the lien’s purchase price, plus interest and fees. But many state laws permit tax lien purchasers to charge homeowners extremely high interest rates that were set decades ago -- as high as 20 to 50 percent. If, as often happens, the homeowner can’t come up with the cash, the investor sells the house at a huge profit compared to the cost of the tax lien.
For example, an 81-year-old Rhode Island woman was evicted two weeks before Christmas from the home she had lived in for more than 40 years because she had fallen behind on a $474 sewer bill, the report says. A corporation bought her house at a tax sale for $836.39 and then resold it for $85,000.
The report charges that individual tax sale purchasers and large investment companies, including Bank of America and JPMorgan Chase, have used the tax sale process as a profit center.
Most vulnerable are elderly individuals who have fallen into default because they are incapable of managing their financial affairs due to Alzheimer’s, dementia, or other cognitive disorders, the report states. The loss of a home is particularly devastating for seniors, whose only retirement savings may be their home equity. Meanwhile, the rules for property tax sales are complex and confusing.
The report estimates that tax lien sales nationwide total about $15 billion a year and are on the rise due to the weak job market, depressed home values, and an increase in mortgage foreclosures.
The NCLC makes a number of recommendations for preserving homeownership while ensuring payment of local taxes, including redemption payment programs, lower investor profits so it is easier for homeowners to redeem their homes, and court supervision of any property sales.
For more on the report, including a press release, a summary of state tax laws and the report itself, titled “The Other Foreclosure Crisis,” click here.
For a CBS News article on the report, click here.
Last Modified: 07/12/2012