Getting a property into the Sheriff’s Sale process can sometimes seem like an impossible task, and it certainly is daunting. Not only that, there’s a few barriers set up to prevent you from getting to your goal of getting a nuisance or vacant property put up for sale. It shouldn’t have to be this way, but it is.
But it’s oh-so-worth it. Putting a nuisance property into Sheriff’s Sale is like waving a magic wand over crime. It’s better than police, it’s better than the District Attorney, it’s better than 500 repeated phone calls to 911. And *poof*, just like that, your block and the blocks surrounding a nuisance house dramatically improve. It’s worth the time, expense, money and aggravation to go through this process. No, really.
But anyone that’s had to go to these extremes will quickly feel that no one appreciates the fact that there’s squatters in a house terrorizing the block and causing a headache for everyone, including police, or that neighbors have been making countless complaints for years. Besides just the crime and the disputes, few care that the property is depressing your own property’s value, or for some of you—that you’re at your wits end and even thinking of moving out of Philly over it. It seems like the forces that be prefer to have junkies and freeloaders around rather than people who pay tax revenue.
Here’s the Situation
First of all, let me say one thing: The City is not out to get you. There’s two major problems with tax sales. The first one, and it’s a biggie, is that the Sheriff’s Department has historically been filled to the brim with incompetence for a very long time. Given the massive amount of properties that need to be taken to sale, the Sheriff’s office only holds auctions a couple of times a month. That’s it. That only leaves room for a couple hundred properties a month at most to get through Sheriff’s Sale.
The Sheriff’s Department still mostly lives in the 19th Century, and the real estate activities that it carries out are still primarily organized on paper. The computer systems have been a mess ever since it was revealed that the insider contract the Sheriff’s office used to have with its own I/T management firm went down the shitter. Why doesn’t OIT manage the Sheriff’s office’s systems is anyone’s guess, but let’s just say modernization is not something they’ve ever demonstrated competence in. They’ve had a long history of corrupt and incompetent staff (at least 5 ex-employees right now are under Federal indictment). Efficiency is just not on the agenda.
City Council and the Mayor’s office have been totally ineffectual at changing the work ethic at the Sheriff’s office and it seems that won’t change in the future either. That’s partly why Councilwoman Sánchez is promoting the Land Bank. The way the legislation is designed to work, the City can choose to divert properties that normally would have to languish waiting for an auction through the Land Bank instead, which does direct sales (and give-aways) so there’s no need to have an auction. So, no Sheriff’s office. It also gives the City much greater authority (through the State-enabling legislation) to lay claim to a property in arrears. In some ways it even sets judicial foreclosure aside (more on that later).
If the Sheriff’s Department puts a frown on your face, this other major reason why tax sales are so slow will make you pull your hair out.
The City contracts out tax lien collection to two outside firms: Linebarger Goggan Blair Sampson, known as Linebarger, and Goehring Rutter & Boehm, known as GRB Law. These two firms plus the Real Estate Tax Unit at the Department of Revenue (which we like to call the RETU) are the Big 3 entities that file the court suits to take properties to Common Pleas to get a judge’s order, known as a Writ of Execution which orders the Sheriff to take a property to auction. Given that the Sheriff’s office will only process a set number of auctions each month, the Big 3 carefully select which cases they will put through the wringer.
There’s a Property I Want to See Go To Sheriff’s Sale. Is it Eligible?
I sure hope you’ve been reading Philadelinquency long enough to know how to find that answer. In case you don’t, look right above the article here and just below our masthead where it says Philadelinquency up at the top. There’s a search box with two buttons: Search by Address and Search by Owner. Use it. It will say in big red letters “ELIGIBLE FOR SHERIFF’S SALE” if a property meets the requirements. However, if you see anything in big GREEN letters like “PROPERTY IN INSTALLMENT AGREEMENT” or “PROPERTY IN REPAYMENT PLAN“, it will not go to Sheriff’s Sale.
The ZBABot website will tell you straight away if a property is eligible for Sheriff’s Sale.
Who Holds the Liens?
Knowing whether a property has tax liens on it is important, but you also need to know who is collecting on the liens. In order to find that out, go to the Revenue Department website and search the property by its OPA number or the address. The very last column will tell you who holds the tax lien. Look for these two statuses:
If you see INST or AGRE on any of the liens, you cannot take this to Sheriff’s Sale. If there’s no status on the lien, then the City has not farmed it out yet to either of the two outside agencies.
Why Do Some Houses Go Through Quickly While Others Won’t be Touched?
Many folks wonder why this process takes forever and a day. First of all, Pennsylvania is a judicial foreclosure state. This means a court case must be heard before a judge in Common Pleas, the debtor then is given ample rights to respond and defend from seizure. Pennsylvania Law also requires a dutiful amount of notification before, during and after the process so that debtors cannot claim that their property was taxen from them illegitimately. This takes quite a bit of time for these cases to work through Common Pleas and it requires paralegals doing real estate research and attorneys. The Big 3 agencies which are handling tax foreclosure all must prepare tons of paperwork to get these cases to move.
All three agencies have a priority system with a single goal in mind: recoveries. By recoveries, what I mean is that for all the title searching, letter-writing, process-serving, notification posting and phone calling, the lawyers and paralegals churning through the deadbeats they handle need to show some measure of success. The definition of that goal as it stands today is called recovery.
For a tax sale, what recovery means is that the property should typically be worth enough money that it can recover a significant amount to pay for the preparation costs taking the property to sale. This isn’t the same thing as the total amount of the liens owed. Depending on how complex the property is and how much work is involved, the agencies will not do the work if they think there’s no hope that the tax sale won’t pay for all the costs it takes to prep the property. RETU has a fixed budget and so do the two outside law firms. Neither work for free.
This explains the vast fields of empty land in Kensington that has never ever seen a Sheriff Sale and the owners have been dead since the last millenium: the City nor the collections agencies believe there will be a buyer for the property, so it’s not worth the trouble of doing the work to prep it for sale. This is also why an occupied drug house might also get the same brush off, especially from Linebarger. They don’t really want the hassle if they think the property will fail at auction.
The effect of the recovery goal is easy to see. The Philly neighborhood that gets the most rapid turnaround time for a Sheriff’s Sale happens to be Chestnut Hill. It’s a foregone conclusion why: it’s a market-rate area, very expensive, so there will be people chomping at the bit to purchase land and buildings up there no matter how crappy the condition may be because it will always come at a steep discount compared with how expensive and desirable Chestnut Hill property is. Recovery in Chestnut Hill is easy. Recovery in Brewerytown is hard.
This is why Brewerytown has Philadelphia’s highest concentration of Real Estate Tax deadbeats and Chestnut Hill has among the lowest. It’s not just a story about incomes although poverty and wealth influence tax delinquency. What both sets of residents know is what exactly the behavior from the City will be if the property tax goes unpaid. Chestnut Hill owners will be on a very short leash and will panic if the taxes go late while Brewerytown owners might see 6 or 7 U.S. presidents in office before the first real threat of a sale presents itself, so they’re not so worried about paying on time.
Coming in Part Two on Thursday, we’ll be covering tips and tactics to get your nuisance property into the Sheriff’s Sale hopper and the updated process on how this works.