Second Online Auction for Adjudicated Property Auction Scheduled for Aug. 5
NEW ORLEANS – August 4, 2015 – (RealEstateRama) — The City of New Orleans will host its second in a series of online monthly auctions for adjudicated properties on Aug. 5, 2015, from 8 a.m. to 8 p.m., subject to a rolling close in the case of last-minute competitive bidding. The City is scheduled to sell about 176 properties throughout the community, where winning bidders will receive full ownership of each property. The City also reminds 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, as well as the list of properties in the Aug. 5 auction, is available at CivicSource.com, which is also where the online auctions will take place.
As a result of the first online adjudicated property auction in July, New Orleans brought in more than $2.5 million after 318 people placed over 8,000 bids to buy 79 properties. In addition, more than 44 delinquent accounts of $1,170,326 were paid in full in the weeks leading up to the auction. Altogether, the first auction brought in nearly $3.7 million for the City of New Orleans – helping to revive economic activity and create a fairer tax system.
“Last month’s adjudicated property auction was a resounding success,” said Mayor Mitch Landrieu. “These auctions are doing much more than putting properties back into commerce, they are also helping to strengthen our communities and collect important revenue for the City to invest in residents’ priorities, such as community revitalization, public safety, street repairs and parks and recreation. These auctions are just the latest example of the renewed spirit of investment we’re seeing here in New Orleans, from former residents coming back home to buy properties in their old neighborhoods to world-renowned companies like the Four Seasons coming to downtown. These investments, along with the City’s affordable housing plans, will ensure that we continue to progress and that every resident shares in that prosperity.”
“So far, seventy-nine properties that have been blighted, a burden on the City, and shifted property tax obligation to those taxpayers who pay their debts, are now back in commerce,” said Councilmember-at-Large Stacy Head. “The success of this first auction should give potential bidders even more confidence in the process, and therefore we anticipate even more participation and bidding in future auctions. While the initial revenue generation for the City and other taxing bodies is wonderful, the real benefit will be seen in years to come as these properties become homes for New Orleanians and continue to stabilize neighborhoods.”
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. Any interested party may bid on a property in the auction, 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). There are still more than 1,000 properties awaiting deposits and research.
All owners of adjudicated properties scheduled for auction 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 24,400 due process notifications have been mailed for the 176 properties in the August sale – more than 138 notifications per property. Also, about three in four properties scheduled for auction on Aug. 5 are vacant lots.
Once a 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. The number of properties available for auction in August could change as delinquent property owners pay the taxes and fees due.
“Our first auction went very well and we witnessed in real time the strong interest residents have in investing in their own communities,” said First Deputy Mayor & Chief Administrative Officer Andy Kopplin. “These auctions will continue monthly as the City tries to get these properties back into commerce and ensures delinquent property owners get caught up on their taxes. 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.”
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 of properties had been adjudicated to the City for longer than 10 years. As properties clear the research and notification processes – and after they have been certified for insurability – they are scheduled for auction on a monthly basis.
The minimum bidding 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.
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 next auction is scheduled for Wednesday, Sept. 2.
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 the current property owner pays all delinquent taxes and fees during the pre-sale period, 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 interested 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 within a few days.
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.
