Auction Process Raises More Than $4 Million; Next Auction Scheduled for Sept. 2
NEW ORLEANS – August 10, 2015 – (RealEstateRama) — On Aug. 5, the second in a series of innovative online monthly auctions for adjudicated properties brought in over $4 million after 417 people placed more than 14,600 bids to buy all 170 properties that were for sale. In addition, 15 delinquent accounts of $525,657.11 were paid in full in the weeks leading up to the auction. Altogether, the adjudicated property auction process has so far brought in more than $8.3 million for the City of New Orleans through two auctions and is helping to revive economic activity and create a fairer tax system. The next auction, which will be held on Wednesday, Sept. 2, 2015, currently includes 165 properties scheduled for sale.
The City also reminded residents that there are over 1,000 properties still available for deposit to begin the research and notification processes before an auction may be scheduled. A list of these properties is available at CivicSource.com, which is also where the online auctions take place.
“Our second auction successfully helped bring 185 properties back into commerce,” said First Deputy Mayor & CAO Andy Kopplin. “These innovative auctions are operating tremendously well and the energy and excitement in the revitalization of New Orleans is apparent. We look forward to continuing these monthly auctions until the City has exhausted its backlog of adjudicated properties. We still have about 1,000 properties awaiting deposits across the city, so I encourage residents to go to CivicSource.com to check them out. All it takes is one depositor to start the research and notification processes so that we may schedule the property for auction.
Councilmember-At-Large Stacy Head said, “The great success of these first two auctions should give confidence to neighboring property owners, first-time homebuyers, investors and others that the adjudicated property auction is an excellent way to acquire property in New Orleans. With thousands of properties available, it’s possible to find one in almost any neighborhood. I urge everyone to visit CivicSource.com to view the available properties.”
A property is adjudicated to the City when its property taxes have not been paid – becoming delinquent – and the City is unable sell the property at a tax sale. The City only auctions properties where five years have elapsed from the tax sale certificate filing date.
In the Aug. 5 auction, 126 people bought 170 properties for a cumulative total of $4,079,600 (nearly 90 percent of the winning bidders were from Louisiana). The highest bid in the auction was $237,000 for a commercial building at 13000 Chef Menteur Highway. There were about 24,400 due process notifications mailed for the August sale and yard signs were placed on each property before the auction as part of the extensive efforts to contact and alert property owners. The revenue will be used to cover the cost of the sale and pay back the taxes owed to the appropriate entities, such as the City of New Orleans, Board of Liquidation, Orleans Parish School Board and Sewerage & Water Board. All remaining revenue will go to the City of New Orleans, where it can be used to invest in key resident priorities, such as community revitalization, public safety, street repairs and parks and recreation.
According to State law, the original property owner(s) have until the closing of the real estate transaction to pay the taxes owed and retain the property. If they do so, the winning bidder and depositors would be fully refunded their money. Once the property is successfully sold to the winning bidder, all adjudicated property owners, as well as those who have a recorded interest in a delinquent property, forfeit all rights to the property.
The City will hold the online auctions for adjudicated properties on the first Wednesday of every month, from 8:00 a.m. to 8:00 p.m., subject to a rolling close in the case of last-minute competitive bidding. The City is scheduled to sell about 165 properties on Sept. 2. The number of properties could change as delinquent property owners pay the taxes and fees due.
Earlier this year, the City made 1,786 adjudicated properties available for sale through auction, more than 90 percent of which were vacant lots and more than 80 percent had been adjudicated to the City for longer than 10 years. Once a deposit is placed and properties clear the research and notification phase – and after they have been certified for insurability – they are scheduled for auction on a monthly basis.
Any interested party may bid on the property, whether or not they placed the initial deposit on the property (depositors who lose at auction will have their deposit refunded within a few days). The minimum starting price will include the cost of the research and legal notifications, closing costs and the cost of the title insurance, which can range from $3,000 to $7,000 depending on the property. Unlike tax sales, the successful purchaser at an adjudicated property auction will own the property free and clear with title insurance underwritten by WFG National Title Insurance Company. A list of the properties for auction is available at CivicSource.com, which is also where the online auctions take place.
A key goal of the adjudicated property auction is to provide title insurance to the winning bidder through WFG National Title Insurance Company. In order to undertake the legal research to be able to offer an Owner’s Title Insurance Policy, each property has undergone a two-step process:
STEP ONE: THE PRE-SALE RESEARCH & NOTICE PROCESS
When an investor chooses to initiate the auction process on one or more properties, he or she will place a deposit of $650 on each property, which starts the prerequisite legal research and notification process that is required before the auction takes place. The pre-sale process takes approximately 120 days to complete. If, during pre-sale period, the current property owner pays all delinquent taxes and fees, the depositor is refunded the deposit and the sale is halted.
STEP TWO: THE AUCTION
If the property is not redeemed by the conclusion of the research and notification period, a WFG National Title Insurance Company authorized agent reviews the file for total compliance with WFG’s prescribed underwriting guidelines. Properties that do not meet the guidelines remain in the research and notification processing stage until it is deemed either insurable or uninsurable within those guidelines. In the case of the latter, the property is excluded and the depositor is refunded; for properties that meet the guidelines, the auction date is set and the depositors are notified. When the auction goes live, the depositors and other interest parties place their bids and a regular online auction takes place (bidders do not have to place a deposit in order to bid, but a deposit is required to initiate the research and notification process that must occur before an auction can take place). The minimum starting price for each property includes the cost of the research and legal notifications, closing costs and the cost of the title insurance. Unlike online tax sales, the successful purchaser will own the property free and clear with title insurance guaranteed through WFG National Title Insurance Company. Losing depositors will be refunded their $650 deposit.
Questions about delinquent taxes and the adjudicated property sale process should be directed to Department of Finance’s Bureau of Treasury by calling toll free 1-888-387-8027.