Tax Lien Certificates Gaining Popularity in 29 States to Fund $14 Billion Budget Shortfall from Unpaid Property Taxes

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Dec 04, 2014, 11:47 ET

WASHINGTON, Dec. 4, 2014 /PRNewswire-USNewswire/ -- National Tax Lien Association "NTLA" research confirms every year America's cities and counties fail to collect $14 billion in property taxes, money vital to fund public schools, libraries, parks, fire and police departments, and other necessary services. Unpaid property taxes force governments to close public schools; lay off teachers, nurses, police, and firemen; shut down community parks; turn off street lights; and engage in other unfavorable, cost-cutting measures.

Twenty-nine (29) states and the District of Columbia solved this problem by assigning and transferring these unpaid taxes as liens to private investors in order to balance their budgets. By selling tax certificates, local governments exchange unpaid property tax accounts for immediate infusions of cash without the headline and other risks, costs, or potential losses they would experience from borrowing against these collections.

State statutes governing tax lien programs include numerous protections for property owners. For instance, unlike mortgages, all tax liens have a redemption time period during which the lienholder is barred from commencing a foreclosure action so the property owner can make arrangements to pay off the lien. Only after the property owner and interested parties of record fail to redeem the lien for a prolonged amount of time and further disregard numerous warning notices can the lienholder exercise its legal recourse to sell the subject property to satisfy the delinquency and restore said property to the performing tax rolls. Accordingly, delinquent taxpayers have the same, if not more, rights and protections when the private sector obtains a tax lien on property than when the local government retains an interest in unpaid taxes.

The NTLA works with municipalities and legislators to promote safeguards in tax lien sale programs to protect consumers, especially the elderly, indigent and disabled, supporting such measures as: minimum tax lien thresholds, installment payment plans, capped foreclosure fees; government ombudsman, lien swaps, and lien buy back protections.

Ultimately, tax lien sales directly benefit local governments, delinquent taxpayers, current taxpayers, and investors. Local governments collect the necessary cash to fund crucial services. Delinquent property owners get time to pay outstanding taxes to keep their homes. Current taxpaying property owners now pay only their "fair share" with a decreased risk of higher taxes resulting from widespread nonpayment. Investors, who assume the risk of the delinquent property owners, receive penalty and interest payments upon redemption of the past due taxes.

Tellingly, the tax lien sale program largely just motivates delinquent taxpayers to pay the sums due and owing. As stated by Brad Westover, the NTLA's Executive Director, "fortunately, over 99% of delinquent taxes are paid prior to a tax foreclosure. Most properties are protected from foreclosure by property owners, family members, or mortgage holders."

About the National Tax Lien Association
The National Tax Lien Association (NTLA), founded in 1997, is a nonprofit professional trade organization whose mission is to advance the legislative, regulatory, business, public relations, and educational interests of the tax lien industry. The NTLA upholds the highest standards of ethical conduct and operates in accordance with all applicable federal and state laws.

For more information, please visit www.thentla.com. To engage with the NTLA visit www.facebook.com/thentla, http://www.linkedin.com/company/national-tax-lien-association and http://twitter.com/the_NTLA.

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SOURCE National Tax Lien Association