How the General Public gets scammed at the Courthouse | Eastern North Carolina Now

It's who you know if you want to steal a tax foreclosure

    Beaufort County sold a tax foreclosed house and lot at the April meeting for $12,285 dollars. There is nothing unusual about selling tax foreclosed properties, we want to sell all our tax foreclosed properties. What was unusual was "how" it was sold.

    The first thing you need to know is the tax value on the parcel was a little over $38,000. The $12,285 was the amount of taxes owed, plus some fees.

    We regularly sell foreclosed property using the "upset bid process." This process is set out in the general statutes. Anyone can make an offer on any property that has been foreclosed on for taxes. Contact the Beaufort County Clerk to start the process. Deposit only five percent of your bid with the Clerk. Then your bid on the property is advertised in the local newspaper and anyone may then up (set) the bid. Everyone, whether in Beaufort County or not, may increase the bid. The upset bid is advertised again and the process goes on until there is no one else wants to bid and then the highest bid gets the property.

    We recently sold a property for more than eighty thousand dollars with a first bid of less than twenty thousand dollars. This process is transparent, everyone knows what is going on.

    The property that was sold in the April Commissioners meeting was sold under a part of the general statute that allows the bid at the courthouse door to be assumed by someone. In this case the bid was owned by the County. When properties are sold for unpaid taxes Beaufort County always places a bid for the amount of the taxes owed. If there are no other bidders, the property is deeded to Beaufort County. All properties that are deeded to the County are then sold using the upset bid process. So why did this property not have to be sold under the upset bid process?

    The short answer is that someone had enough information to know when the property was being sold for taxes and to know to make their offer before the deed could be signed by the trustee and to request that they assume Beaufort County's bid. In order for this to happen there had to be a lot of advance planning and information passed around.

    Let me say that this issue is not about who got the property. My concern is that the process is not fair to all taxpayers and persons who may be interested in buying tax foreclosed properties. The reason it is not fair is because it is not known how much the buyer is going to pay, until after the deal is cut. Another problem for me as a commissioner is that I am finding about this special deal after the fact. A huge problem for me is fairness to every person. Everyone should be treated the same. To accomplish this, full and fair disclosure should be available to everyone interested.

    Not everyone has the time to keep up with individual tax foreclosures, be at the auction on the courthouse steps, research properties for other liens that may be against the foreclosed property and make the offer.

    Moreover, timing is critical. The offer has to be made before the trustee signs a deed to the county. As you can see the door is open for special people to get special favors.

    Because of my concern about fairness to all, I made a motion at the May meeting that all properties be sold under the upset bid process so all persons could be treated fairly. To my surprise the issue failed to pass. I am still trying to figure out what is wrong about treating all fairly within a democratic form of government.

    The upset bid process is fair. Anyone who wishes to bid on the property knows what the last high bid was. They can "upset" this bid by bidding a higher amount. The property is then re-advertised, and the process continues until there are no higher bidders. But what is important is that everyone has the same information. You know what the high bid was. If you bid higher, everyone knows what you bided. The important thing is that the process is equally transparent to everyone.

    In this case, or in any case where an "assignment" sale is done the only people who know the bid price are "insiders" until the deal is already cut. Unless, that is, the Commissioner give anyone who wishes to bid and raise the "assigned" value. That may or may not happen, but at least it is open and above board.

    So, the door is open for special favors to special people who have the right connections to get information that is not available to the general public until it is too late. The "assigned" bid process is not transparent. The upset bid process is transparent. That is why I objected to this transaction and why all tax foreclosure property should be sold subject to upset bidding.