Business and Economics

Senate Bill Reviews Abandoned Home Tax Sales

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January 30, 2014 —

INDIANAPOLIS – Statewide tax sales of vacant and abandoned properties will be reformatted under a proposed Senate bill that would mean new owners for the homes – or demolition of the structures.

Sen. James Merritt Jr., R-Indianapolis, the author of Senate Bill 422, said that vacant and abandoned homes “poison the neighborhoods of Indiana.”

“That home that probably has trees growing up in the middle of it is becoming blight for the community.” Merritt said. “That is unsafe. That is the home that I am after.”

Once a home is vacant for a period of time, it would go to tax sale and the buyer would be given immediate possession of the property.

“This allows for the home to be vacant for as short a time as possible and expeditiously get it in the hands of a new owner,” Merritt said.

Abandoned homes are ones that have utilities shut off, taxes have not been paid, and inspections have already occurred.

The attorney general’s office will begin collecting the registrations for the tax sales starting on July 1.  Right now out of state buyers get 10 percent on the overage.  The bill would reduce that to 5 percent.

Out of state buyers who want to participate in the tax sales must be registered and in good standing with the secretary of state. Buyers can be excluded from participating due to their purchasing history.

“The idea is to try to eliminate the bad actors (buyers) from participating in the tax sales,” said Tom Dinwiddie, an attorney for the Indiana Mortgage Bankers Association.

“Currently, the buyer of the tax sale doesn’t buy real estate, they buy a certificate that, in one year, they can turn into a deed,” Dinwiddie said. “One of the unintended consequences is that after that sale, the property will sit there with the buyer not wanting to take possession because redemption may occur or it may be bought out from under them.”

Currently, the redemption period is the time after foreclosure when the owner can reclaim or “redeem” the home. Under the bill, the period would consist of a notice to the lender and owner before the sale. Right now, the lender is not notified of the sale until after it takes place.

“We would like to find a way to ease that burden because we think that is common sense to be able to permit counties that are strapped for money to have the financing to order title searches to be able to deal with this before the sale,” Dinwiddie said. “This is not going to eliminate vacant or abandoned properties but it is an effort to try and do what can be done.”

The bill passed the Local Government Committee on a 7-1 vote and now goes to the full Senate for consideration.

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