FULTON COUNTY, Ga. — It’s a tax debt you may not even know you owed. The bill comes from a private company. It’s a common practice in Fulton County that some homeowners say is unfair.
Channel 2 investigative reporter Justin Gray talked to someone who nearly lost their home in Alpharetta. You expect to get a tax bill from the county, not a private company.
That’s why some of these bills from third party lien holders end up in the trash as junk mail and home owners end up with big problems.
“I paid off a 30 year mortgage on it,” homeowner Scott Steidle told Justin Gray.
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Steidle has owned his Alpharetta home for 36 years.
“When we moved down to Florida in 2014, we started renting out the property.” Steidle said.
But he discovered he was on the verge of losing the property and all those years of equity when he put his own name in background check software he uses for prospective tenants.
“And I saw that there was a lien on the property,” Steidle said.
Steidle says when he called about the lien he discovered the house was just weeks away from being foreclosed in a tax sale by a company he didn’t even know he owed money to.
“So because of a $1,600 tax bill, I could have lost my property,” Steidle said.
So how did it happen? It goes back to the property taxes on the home. Private companies can buy the tax lien on a home from Fulton County tax commissioner Arthur Ferdinand when your taxes go unpaid. One company, Investa Services, is the biggest holder of those third party tax liens.
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Attorney Allie Jett is an expert in real estate law.
“Since you can sell it for 100 cents on the dollar, they get to pass those collection costs on to third parties,” Jett told Gray.
Fulton County says Steidle never paid the 2019 property taxes on the home. He says he never received a bill.
He’s paid on time every other year before and even after moving to Florida.
“I have never heard of Investa Services. I’ve never received any correspondence from them,” Steidle said.
Third party lien holders are required by law to notify you within 60 days of assuming your debt.
They can charge you a one-time 10% penalty and 1% per month interest. They must wait 12 months before foreclosure.
But Allie Jett says those notices from an unfamiliar business often get confused with junk mail and trashed.
“The notice comes from the third party debt collector, there is no notice that comes from the county that says we have sold your lien,” Jett said.
Investa Services has an ‘F’ rating from the better business bureau. One complaint read: “I think this practice is unethical and should be unlawful.” Another person wrote: “My disappointment with them is increased by their poor customer service and clear intention to avoid contact with their debtors.”
It turns out Georgia law does not set any penalties for third party lien holders who don’t follow the law.
“It doesn’t make it a crime not to or institute some sort of fine or declare even that your liens are invalid. It just says that you shall do these things,” Jett said.
Channel 2 filed an open records request for data on how much this is happening. We found that in 2020 alone, 16,644 tax liens were transferred to third parties, worth nearly $35 million.
But that is only a fraction, just 1.4% of total tax collections.
In the past five years, our open records request found that Fulton County has transferred more than $133 million worth of tax bills to private companies.
We also reached out to Investa about how they communicate with the people whose tax obligation they purchase but did not get a response.
“There’s a moral hazard at work here. And that’s where people profit from a lack of communication,” Steidle said.
Fulton County Tax Commissioner Arthur Ferdinand sent Channel 2 statement saying that the facts of how this program works “are never presented to the public due to private agendas” and “misinformation is passed on to the public.”
Ferdinand said transferring the liens allows the county to collect 100% of taxes due and actually gives homeowners more time to avoid foreclosure since the third party is require to wait 12 months.
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Here is the full statement:
“As the Fulton County Tax Commissioner, I am elected to collect taxes in Fulton County. I am mindful in my decisions that efficient and good tax collections benefit everyone. Because Fulton County operations rely primarily on property taxes, collecting taxes takes on a whole new meaning. It means jobs in Fulton County; it means being able to afford to provide services to Fulton County residents; to be able to fund Grady Hospital; to contribute to the arts; to maintain the health and safety of the general public; and to insure that our schools are well funded for our children’s benefit. Quite simply, it means being able to improve the quality of life for all of Fulton County citizens.
During this economic downturn Fulton County was fortunate to have weathered the storm without having to raise millage rates, cut services, or lay off staff. A combination of high performance tax collections and skilled budget decisions by the Board of Commissioners is the key to this good fortune, while other metro counties and the state struggle to balance budgets.
By law a Tax Commissioner has three options after the initial bills are mailed to taxpayers:
- Do nothing and let the payment of taxes be completely voluntarily.
- Foreclose on property after taxes become delinquent and liens are placed on the property.
- Transfer tax liens after taxes become delinquent and liens are placed on the property.
The first is not truly an option; we can take it off the table.
Option 2 is the preferred means of collecting delinquent taxes by an overwhelming number of Tax Commissioners despite its expedience towards foreclosure. Particulars in the media suggest that most Tax Commissioners collect delinquent taxes themselves, however, the preponderance of these Tax Commissioners use private agencies to facilitate the levy process during property foreclosure. These agencies, acting on behalf of Tax Commissioners, tack on exorbitant fees at the very front of the levy process, as approved by the Georgia legislature in 2009 even though the 10% penalty is supposed to be used to assist the county in paying the expense of collecting delinquent taxes. This process is costly to these delinquent taxpayers, and puts them in peril of losing their homes within weeks of becoming delinquent. And even though, for example, DeKalb commences the levy process immediately after taxpayers become delinquent, it could not replenish the county’s budget coffers in time to prevent austere measures: the closing of several libraries and stopping construction on others, closings of schools, cut back on services, layoffs and early retirement of employees. The benefit of utilizing a private agency to facilitate the levy process in almost all circumstances is that the private agency is compensated when the taxes are collected either prior to or at foreclosure from the fees that are added to the delinquent property. This process alleviates the need for the county or city adding personnel and other operating costs which end up being paid for by taxpayers.
Because Fulton County opts to transfer tax liens, the County is constantly criticized by members of the press for this practice. Notwithstanding how many times the entire process is explained, the facts are never presented to the public due to private agendas. Since the lien sale and foreclosure processes are confused in the media, misinformation is passed on to the public.
When a lien is transferred, the lien holder can only apply recording costs, interest and the penalty that would have accrued if the lien was still in the hands of the Tax Commissioner. For the first year at least, and until the lien is presented to the County Sheriff for levy and foreclosure, if still unpaid and ignored, the amount owed the lien holder is essentially the same as if the lien was still held by the Tax Commissioner. So the suggestion that amounts owed on liens purchased under Option 3 skyrocket after purchase, is purposefully misleading and false.
Lien holders do not have property rights; they cannot collect rent, cannot trespass on the property to improve or maintain its curb appeal, and should not pay taxes on the property. The lien holder can purchase other liens placed on the property to protect their interest in the property. The physical appearance of the property on which liens were purchased is a matter of code enforcement against the title holder.
To be clear, selling tax liens is legal and cost counties nothing because the governing authorities get 100 cents on the dollar when liens are transferred. That revenue can be used immediately to provide services to the public and educate our children. In the meantime, the delinquent taxpayer whose liens were purchased has at least a year to repay the debt to the lien purchaser before any foreclosure action can begin. It is Georgia law. This is a far better scenario for taxpayers than the immediate foreclosure process which most Georgia counties pursue.
For my money, if I am having financial difficulty for whatever reason, and unable to pay taxes when due, I would much rather have a year to pay, than to have foreclosure proceedings initiated as soon as taxes become delinquent. At the same time, since the Cities, County, School Districts, Tax Allocation Districts, Community Improvement Districts, all received revenues immediately, millage rates do not have to be raised to compensate for uncollected delinquent taxes. For the vast majority of taxpayers that pay their taxes by the due date, over 95% in Fulton County, this practice alleviates the need for additional governmental staff and operational costs that would add to the burden of all taxpayers. It is a win, win, scenario for the governing authorities and tax payers at large.
2010 was a solid year of tax collections in Fulton County. Even though the 2010 due date was October 31st, by December 31st the Tax Commissioner’s Office had collected over 97% of all taxes billed for the 2010 billing season which ends on July 31st 2011. At the writing of this article the City of Atlanta and the County’s Collection is already at 98%, Johns Creek and Sandy Springs are 99%, and both School Boards are at 98%. Fulton County’s bond rating is at an all-time high despite the bad economy, and its 2010 fund balance was a record $157M, cash left over after all the bills were paid, achieved without a millage rate increase.
This Office prides itself in ensuring Fulton County, the Atlanta Board of Education, the Fulton County School Board, the cities for whom we collect taxes, Atlanta, Mountain Park, Chattahoochee Hill, Sandy Springs, Johns Creek receive their tax revenue timely in order to budget for and provide the services you expect. As importantly, the Board of Commissioners ensures that your tax dollars are spent in the most efficient, effective manner possible, always keeping the taxpayer’s interest at the forefront.”
