Tax Lien Sale
The purpose of the annual Tax Lien Sale is to collect the delinquent real estate taxes owed to the County’s school districts, agencies and local governments.
Basic Overview of the Sale
The State of Ohio and many of its political subdivisions require almost all owners of property, whether those owners are persons or corporations, to pay taxes on their real estate. The taxes that are due are a lien against the property for the benefit of the State, which means that the real estate is collateral guaranteeing payment of those taxes (much like a mortgage permits real estate to be used as a collateral for a loan). If a person does not pay the debts for which real estate is collateral, a creditor can file a foreclosure action to force the sale of the property. In the case of a foreclosure, court costs are paid first, then State property tax liens and assessments, and then the banks and other creditors.
Stephen D. Burcham is the elected Treasurer of Lawrence County, and is required by law to collect property taxes. If a person refuses to pa y those taxes, the Treasurer may either bring a foreclosure action, in which case the real estate is sold, or he may sell tax certificates, as he is doing in this case.
When the Treasurer sells tax certificates, he is selling the State’s right to collect delinquent taxes to another person. This person then “stands in the shoes” of the State of Ohio, such that if a foreclosure is later filed, the person will be paid from the sale proceeds before the bank or other creditors. The benefits to the County of this means of collection rather than foreclosure are several:
1) the costs of the sale are cheaper for the County; 2) the sale can be conducted more quickly than a tax
foreclosure sale; 3) people may be more willing to make an investment in a tax certificate than trying to actually purchase the property; and 4) the County receives the money it is owed more quickly.
As with all investments, however, there is no guarantee of profit to a tax certificate purchaser.
It is possible that more taxes are owed on a parcel than it is worth, in which case the purchaser may end up receiving the property in the future (as will be discussed later). Additionally, the purchaser must
wait at least a year to force collection, and the only way to force collection is to brine a foreclosure
proceeding against the owner to force the sale of the property. Remember: At this sale, the purchaser is not buying property; instead, the purchaser is buying the right to receive money for which the property serves as collateral.
The information in this handout is being provided to you as a courtesy by Treasurer Stephen D. Burcham and Attorney Mark K. McCown. It contains general information, and does not constitute financial, tax or legal advice directed to you. Should you have any questions concerning the impact on taxes or other financial matters, please consult your financial advisor. Should you have specific legal questions, you should contact an attorney.