Norwalk tax collector explains, defends tax sale process

NORWALK, Conn. – Boards in the City Hall lobby might seem humiliating to the Norwalk property owners who are delinquent on their taxes, but tax sales are the best option available to collect the money and the publicity-seek tactic works, Norwalk Tax Collector Lisa Biagiarelli said.

For one, the publicity makes it more likely that a property owner will be located and notified that their property is being sold. For another, the publicity makes it more likely that people will pay their taxes.

“The statute tells me that I have to do these things,” Biagiarelli said. “But I also try to generate as much fuss over this as I can because, invariably, somebody will see something and it will be like ‘That guy who owns that property, I know where he is. He’s not here, he’s in Florida teaching for a semester’ or something like that, and they’ll get a hold of somebody that I wasn’t able to get a hold of. I don’t do it to bug people, but they get very upset, they rip the pictures down.”

But Biagiarelli said the tax sale has merciful elements to it.

There are two islands among the 150 properties listed on the boards, as well as 55 boat slips. Some photos are covered with slips identifying them as paid since the list was made; that includes three bills that were paid since the boards went up Monday, according to the city’s website.

Biagiarelli said earlier this month that Norwalk had collected 98 percent of the taxes owed, and $2.6 million had been collected since the process began, with 220 properties on her delinquent list. She guessed that only 12 to 20 would actually go up for auction.

“Forgetting the boat slips, I’ll probably be left with about 20 other properties — between a dozen and 20. Most of the other 90 or other will pay; a lot of them have been in prior sales, either the 2010 sale or prior sales, they do this all the time. I can’t really comment on that; that’s just the way it works out, but we’ve seen this before.

“We go through this very public process that people get very agitated about because I’ve got the picture of their house online, I’ve got the picture of their house in the City Hall lot lobby … It’s a Constitutional issue because I’m taking your property and I need to notify you, so I’m going to notify you however I can.”

There are reasons Norwalk, under Biagiarelli’s supervision, does a tax sale as opposed to a lien sale or a foreclosure, she said.

“Different towns have different approaches to how they collect delinquent taxes. Some towns do lien assignments, which means when we file our liens in the land record what they do is they package all those liens together and, just like banks sell mortgages to other banks, towns sell those liens to an investment company,” Biagiarelli said.

The investment company then sits back and lets 18 percent interest accrue.

If a town chooses to foreclose, the matter is usually turned over to a politically connected attorney who goes to court, Biagiarelli said. “The people object, the judge says ‘OK work it out’ and it takes forever,” she said.

“I don’t like to do either of those things,” Biagiarelli said. “I like to do a tax sale. What a tax sale is, it’s very labor-intensive for the tax office. It’s basically an extra judicial seizure of the property where the tax collector seizes and sells it at a public auction. We don’t have to go to court. We don’t have to be supervised by a judge. We don’t care about other liens on the property. All we care about is the taxes — I don’t care that there is a mortgage. I don’t care that there’s a lien from Sears. A lien from Norwalk Hospital, sort of. I care in that I have to do a title search and I have to notify all of them. If I sell it and if the owner doesn’t redeem it, all those liens go goodbye. We are ahead of even the IRS.”

Notifying a mortgage holder that the property is slated to be sold for unpaid taxes usually results in the mortgage holder paying the bill, Biagiarelli said.  That’s because Biagiarelli will begin the bidding at the amount owed to Norwalk, and if that’s all she gets she’s fine with it.

“In most cases, the people owe them more than they owe me,” Biagiarelli said. “Because, again, I do these every couple years so there’s really nobody that owes that much. If you look around if you go to other towns you’re going to find that some people owe 10-, 12-, 15-years’ worth of taxes. It’s not like that here. The most anybody owes is maybe going back to 2007, because I probably had them in my last sale and I didn’t sell it or they got an injunction and they stopped my sale on their property, or they filed for bankruptcy and I had to pull them out. But there’s really nothing that goes back any further than that because we do this all the time.”

If the property is sold all is not lost – property owners have six months to redeem their property.

“Just because we sell the property on July 21 doesn’t mean they lose it on July 21, because there is redemption period of six months,” Biagiarelli said. “… if people get upset and they say you’re going to sell my property I’m going to be homeless and everything, no you’re not going to be homeless because you still have a six-month redemption.”

If the property owner pays the bill, it includes an interest payment to the bidder.

When the bidder pays Biagiarelli, “I pay off on their taxes and then the overbid I put in a separate account and I wait. If the owner comes back, I take that overbid out of the bank,” Biagiarelli said. “I take the taxes that were owed and the owner has to pay the interest on the bid. That is the bidder’s reward for having his money tied up for potentially six months.”

The tax collectors’ office does all of the preliminary work itself.

“There are companies out there who do this for other tax collectors,” she said. “They charge $5,000 per property. There are people making a living on this. I’m like, ‘I can’t do that.’ How do you justify that? These people are already struggling. That’s part of our job. That’s part of our job and everybody gets involved. … We charge per property it ends up being $1,800 or $2,000 per property, but it’s still way less than they would charge if we were foreclosing and had to go to court and appoint a committee and everything, so it’s very efficient and we don’t have to wait and we don’t have to wait. I get my money by July that’s what I like about it too.”

Holding a tax sale works, Biagiarelli said. It’s “cleaner” than a lien sale because new debt can accrue on the old debt and then taxpayers have to pay the lien company.

“It has ancillary effect when you put those pictures up there everybody understands what you’re doing,” she said. “When they get their bill in July from me they pay it. It has this ancillary effect on our collections. Other people who aren’t even involved in a sale come running into pay. They pay their car taxes because they’re afraid of the tax sale.”



4 responses to “Norwalk tax collector explains, defends tax sale process”

  1. John Hamlin

    If anyone should be upset about the necessity of a tax sale, it’s the taxpayers who are paid up and who are footing the bill for running city government — including the cost of running the tax sale — while those who are delinquent have been avoiding their responsibility.

  2. EveT

    Thanks to NoN for this informative article. I’m sure many people didn’t know how the process worked until they read this.

  3. J.L.

    “It’s basically an extra judicial seizure of the property where the tax collector seizes and sells it at a public auction. I don’t care that there is a mortgage. I don’t care that there’s a lien from Sears. A lien from Norwalk Hospital. If I sell it and if the owner doesn’t redeem it, all those liens go goodbye.
    In other words, who needs that silly antiquated common law idea of due process. Some day someone is going to challenge this “extra judicial seizure of property,” and the city will be liable for all the legal costs defending the practice. Granted it appears, in the short term, to be an effective way to collect but in the long term, big picture, is it morally correct, does it send the welcoming message we want to project? Come to Norwalk, if you fall behind on Norwalk’s high taxes, even for a short period, Norwalk will size your investment and shaft all your note holders and ruin your credit for life. Gotta be a better way. One day Rowaytonites will organize and revolt and the cowboy will ride off into the sunset ultimately triumphant for beginning the movement to slay the tax dragon.

  4. LWitherspoon

    Speaking of delinquent payment of property taxes, Common Councilman David Watts owes a total of $7,602.10 in unpaid property taxes, interest, and sewer fees. This according to the City of Norwalk website. A portion of that sum dates back to the 2011 tax year. Mr. Watts appears not to have paid ANY property taxes for the 2012 tax year and owes $629.65 in interest for that year.
    Now Mr. Watts wants to serve in Hartford as our State Representative. There are plenty of reasons why that’s a bad idea. Paying your taxes is a fundamental part of living in a civilized society. Mr. Watts’s refusal to honor his financial obligations to Norwalk should be remembered by all voters come primary time in August.

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