Auctions Will Spur New Development; Property Owners Can Pay Taxes & Fees Owed to Stop Sale
NEW ORLEANS – July 1, 2015 – (RealEstateRama) — Today, the City of New Orleans began the first in a series of online monthly auctions for adjudicated properties. The auction is now underway and will end at 8:00 p.m., subject to a rolling close in the case of last-minute competitive bidding. The City is selling more than 80 properties throughout the city, providing winning bidders with full ownership of each property.
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 includes the cost of the research and legal notifications, closing costs and the cost of the title insurance, all of 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 are taking place.
“These auctions will help to spur new development and strengthen communities across New Orleans,” said Mayor Mitch Landrieu. “As we continue to rebuild New Orleans back stronger and better than before, this is another major step in reviving economic activity across our city. This process will not only enable the City to collect important revenue, but it will also encourage new construction and new development in many neighborhoods throughout New Orleans.”
“Since joining the Council in 2006, I’ve advocated for the Administration to perfect the constitutional ability of the City to seize and sell property when owners refuse to take responsibility,” said Councilmember-at-Large Stacy Head. “I am ecstatic that after nearly nine years of work on this initiative, the City has taken steps to sell thousands of adjudicated properties through an online auction process. The sales of these properties will return the properties to commerce, increase the quality of life in neighborhoods, and return significant revenues to the City, which can be used to fund priorities like NOPD and Code Enforcement Officers. I encourage citizens to visit CivicSource.com to view the properties and bid!”
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 will only auction properties where five years have elapsed from the tax sale certificate filing date.
Earlier this year, the City made 1,786 adjudicated properties available for sale through auction, more than 90 percent of which are vacant lots and more than 80 percent of these properties had been adjudicated to the City for longer than 10 years. Since then, more than 635 properties have had deposits placed, moving these properties into the research and notification phase. More than 75 percent of the depositors live in Louisiana. As properties clear the research and notification phase – and after they have been certified for insurability – they are scheduled for auction on a monthly basis.
“This is a pioneering effort to move thousands of tax adjudicated properties back into commerce with an innovative online auction model,” said First Deputy Mayor & Chief Administrative Officer Andy Kopplin. “We are making this process as fair, efficient and transparent as possible. Many delinquent property owners have paid and caught up on their taxes, and they will continue to have the opportunity to do so leading up to the auction. These adjudication sales will help the City recoup important revenue to fund residents’ priorities, like support for our NOPD officers. At the same time, we are also spurring new investment in neighborhoods all over New Orleans that will strengthen our communities.”
Since the City commenced adjudicated property auction activities earlier this year, 42 property owners have paid their taxes and fees owed, which amounts to $1,170,326.29. All owners of the more than 80 adjudicated properties being auctioned today have received multiple notices of taxes owed with a legally-mandated 60-day repayment grace period, including first-class and certified notices of sales. In fact, more than 9,850 due process notifications have been mailed for the properties in the July sale – more than 100 notifications per property. Once the property is successfully auctioned and then sold, all adjudicated property owners, as well as those who have a recorded interest in a delinquent property, will forfeit all rights to the property.
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.