Missouri Liens Matter (Clay County) Lydia H McEvoy, Esq. Elected Collector of Revenue for Clay County, Missouri

Tax sales in Clay County Timeline—prior to sale Property values are assessed as of January 1. Values can be appealed March through July. Values are finalized by August, certified value roll prepared. Levies are set in September and early October. Bills generally go out between late October and mid-November. Bills are due December 31. Bills are immediately delinquent January 1. Lien of the state exists as of March 1. Tax liens may be sold beginning that same August. Counties may choose to first offer liens in either the 1st, 2nd, or 3rd year of delinquency, but liens must be offered at sale by the 3rd year of delinquency.

Tax sales in Clay County Timeline—after the sale If a lien is purchased at either the 1st or 2nd offering, there is a 1 year period during which the homeowner has an absolute right to redeem. During the redemption period, the lien purchaser MUST: Pay ON TIME the subsequent taxes that come due December 31 after the sale. Conduct a title search. Provide notice by certified AND regular mail, at least 90 days before the end of the redemption period, of lien purchase and deadlines. Make additional efforts at notice if mail fails. Claim a deed after the expiration of the redemption period by submitting an affidavit of compliance.

Tax sales in Clay County Interest and penalty / investor costs Prior to tax sale, the homeowner was paying 18% per year on the taxes due, and a 7% penalty on the total bill. Beginning the day of the sale, the homeowner pays only 10% on the amount of the tax lien. The homeowner pays NO INTEREST on any overbid (surplus). When subsequent taxes become due, the homeowner pays 8% interest on the amount paid by the lien purchaser. The homeowner pays NO INTEREST on any title search and postage costs added to the bill.

Tax sales in Clay County 2015 sale statistics—CLAY COUNTY 288 parcels offered for sale 119 parcels sold Total sale time 3 hours and 20 minutes $1,135,992.65 taxes collected ($9,546 average taxes per lien sold). $1,142,105.47 overbid paid ($9,595 average surplus per lien sold). 40% of properties are occupied 75% of properties can be developed or rehabilitated 67% of sold properties redeem 22% of sold properties result in a deed 11% of sold properties result in a lost interest

Tax sales in Clay County Top 10 surplus amounts paid: $29,836 $32,569 $34,550 $42,765 $50,045 $50,236 $51,839 $59,604 $60,881 $86,410 Top 3 investors spent over $350,000 each.

Tax sales in Clay County What happens to the surplus? If the investor fails to do due diligence, the tax dollars paid are lost, but the surplus can be refunded to the defaulting investor. If the investor claims a deed, the surplus must be paid to the homeowner or legal heirs.

Tax sales in Clay County Controversy #1--FRAUD Investor preyed on a fragile homeowner, threatening (in the middle of winter) to call the police and charge him with trespassing. Forced the man to sign a quit claim deed. Investor found the daughter of a homeowner that had died without a will. Convinced her to forge her mother’s signature to a quit claim deed because “all was lost, and you don’t want to fight this in court.” Investor threatened to charge a man rent to stay in his home during the redemption period. Agreed to “settle” for a quit claim deed. IN EVERY CASE, the investor then used the quit claim deed to assume the status of the homeowner losing title and claim the surplus.

Tax sales in Clay County What steps are we taking? We posted notice on every property this year. We had only 133 properties to offer at the time of sale. We conduct seminars for homeowners facing the sale and for potential investors. We now “serve” notice of sale on every homeowner whose lien sold at the sale. We are conducting all title searches this year, ensuring timeliness, uniform quality, and fair pricing. We now accept prepayments of future taxes to help homeowners afford their bill. We created an interactive website with mapping information so investors could bid intelligently (http://gisweb.claycountymo.gov/taxsale/). One week before the sale, we banned the fraudulent investor.

Tax sales in Clay County Controversy #2—Lien purchaser legal status Investor purchased a property with about $5,000 in taxes due, and paid $45,000 over bid, for a total purchase price of $50,000. Assessor indicated market value of the property was $140,000. Property fell into serious disrepair due to unfortunate circumstances of homeowner. Current appraised value of property is $37,000. Spoke to all parties to see if a deal could be made. Homeowner was adamant that she needed to leave, needed the surplus money to start over. Lien purchaser attempted to redeem property against the will of the homeowner.

Tax sales in Clay County Legal analysis RSMO 140.340 states that lienholders or those having an interest in the property may redeem. Traditional interpretation is that the lien or interest must have been in existence at the time of tax sale, and must a recorded or other legally binding interest. Traditional interpretation is that the tax lien purchaser’s interest is inchoate until redemption period expires—NO ACTUAL INTEREST. Collector refused to allow lien purchaser to redeem. Issued deed based on previous paperwork, and paid surplus to homeowner.

Tax sales in Clay County Bellistri v. Crouther, 2008 WL4771554 (Mo.Cir.) (Trial Order) The “holder of a certificate of purchase, throughout the ... [one year] immediately succeeding the delinquent tax sale, is vested with an inchoate or inceptive interest in the land subject to the absolute right of redemption in the record owner in whom the title remains vested.” M&P Enterprises, Inc. v. Transamerica Financial Services, 944 S.W.2d 154,157 (Mo. banc 1997) (quoting, State ex rel. Baumann v. Marburger, 353 Mo. 187, 182 S.W.2d 163, 165 (Mo. 1944)). Legal title may not vest in the purchaser until the period of redemption has lapsed. After the one-year redemption period has expired, the purchaser can consummate the delinquent tax sale and foreclose any rights of redemption under the tax liens foreclosed by applying for a collector's deed in compliance with the notice requirements of Section 140.405, RSMo.

Tax sales in Clay County https://claycountymo.gov/taxsale