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What is a tax sale and how does it work?


Steve Stitzel is a lawyer with three decades of tax sales experience. His firm represents towns from Bennington to Newport. He says in recent years towns have gotten tough on tax collections.

"Budgets are tight; they need the cash," Stitzel said. "They need to get it collected."

So more and more are going after delinquent property owners each year. A property owner who owes back taxes is sent a letter from the town outlining the amount owed. It doesn't matter how much; any debt can trigger a letter. If there is no response the town hires a lawyer like Stitzel, who sends a formal notice to the property owner that a tax sale will happen. It warns the owner they have two weeks before the sale date is announced in a newspaper.

Reporter Kristin Carlson: You've dealt with so many cases over the decades, how many cases do people end up paying those delinquent taxes?

Steve Stitzel: From those letters that we send out 80-90 percent.

If the debt is still not paid, the tax sale goes forward. It's like an auction. Bidding starts at the amount of taxes the town is owed. The winning bidder has to pay for the property on the spot. The town takes what it's owed and then puts the remainder of the price in an account for the homeowner.

Kristin Carlson: Can that bidding get pretty heated sometimes? Do people want to make sure they get the property?

Steve Stitzel: It can get intense where you have a couple people who are very, very interested in getting the property. Frequently if you have a neighbor, an adjoining landowner who wants that property who believes they might be able to get it, they might hang in the bidding process. So, there can be some real competition in the bidding process.

But even after the auction the sale is not final. The homeowner still has a year to pay back the town and the winning bidder. If they don't, at the end of the year they leave their home and the town gives them the auction money that's been held in an account. Stitzel says of the couple of hundred delinquent taxpayers put on notice each year, only two or three actually ending up losing their homes in a tax sale.

"Properties are routinely redeemed in that year," Stitzel said. "It's sort of the tax sale process forces the landowners to deal with the reality of their situation."

Tax experts say tax sales are very individual and because there are so few, it's hard to generalize. Sometimes properties are sold well below market value, other times popular properties get bid up for a higher price.

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