August 16, 2014 at 1:00 am

Wayne Co. could reclaim nearly 20K auctioned properties over unpaid bills

Detroit— A Wayne County judge on Friday gave county officials the authority to take back nearly 20,000 tax foreclosed properties auctioned off to new owners who also didn’t pay bills.

The Wayne County Treasurer’s office said it wants to get tough on tax deadbeats, many of whom buy properties in bulk at the county sale and then milk them for rental income until foreclosed again.

The ruling was the result of the county’s first attempt to enforce a provision added in 2011 to the annual auction that requires buyers to stay current on tax bills. Generally, owners lose their properties after three years of delinquency.

“Once it goes through the foreclosure process we don’t want to wait three years until we do it again,” said David Szymanski, the Wayne County chief deputy treasurer. “It is a simple fact we have to get serious about collecting taxes.”

But many of the about a dozen owners who appeared at Friday’s court hearing argued they should keep their homes because they never knew about the county policy.

“There are a lot of little people getting scammed,” said Marlon Thompson, who risks losing his eastside brick bungalow.

He bought the vacant, fire-damaged home in the winter from a real estate company that didn’t tell him about the $4,500 in 2012 taxes and fees due. He said he checked the county’s website at the time of the sale and didn’t see any 2012 debt.

Thompson said he has spent several thousand dollars rehabbing the home and is a few months from moving in. He said he can’t afford to pay the bill.

“(The county) should be able to look at individuals and companies,” Thompson said. “Everybody else got bailed out around here. We are the ones who kept the city going.”

Wayne County Circuit Judge Robert Colombo Jr. said he was sympathetic with the property owners and noted the importance of hiring a lawyer when buying property because the county policy was spelled out in the property’s deed.

“What good does it do to foreclose on property to have people buy it and have people not pay their taxes,” Colombo said. “This is a vicious cycle the treasurer is trying to stop.”

But owner Larry Sargent argued the county shouldn’t foreclose because of the city’s inflated assessments. Sargent said the house he bought last year for $500 is valued by the city at $22,000.

“Let me pay on what is actually the value of the house,” he said. “Right now the assessed values are way out of range.”

Owners still have time to save their properties. The county isn’t going to seize them until January. County officials said they would still accept payment through mid-December.

After January, the treasurer will transfer ownership to the Wayne County Land Bank or the Detroit Land Bank. Land bank officials have said they will allow owners to reclaim the properties if they pay the outstanding bill, as well as a $500 processing fee.

It was not clear Friday what the land banks will do with properties whose owners refuse to pay.

A handful of investors are challenging the treasurer’s policy and their arguments will be heard separately by Colombo in the next several weeks.

The debt owed on the 20,000 properties wasn’t available Friday.

More than $80 million was owed on about 22,700 properties as of June. That represented 78 percent of the 29,000 properties auctioned by county treasury officials since October 2011. The vast majority are in Detroit.

The county added the provision in auction sales in response to a series of Detroit News reports about buyers who shed their tax debts by buying back their own foreclosed properties at public auctions. County officials said they hoped cities would enforce the rule and took action when few did.

cmacdonald@detroitnews.com
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