Advertisement

Maryland's tax auction dilemma

June 04, 1997

If a property owner does not pay his tax bill in 11 months, the property is placed on the auction block. The high bidder then pays the tax bill. The original owner has six months to come up with the money plus interest.

If he does, he reclaims the property, and the bidder gets his original investment plus interest back. If he does not, the bidder can then begin a foreclosure process to take the property. At that point, he owes the rest of his bid.

But the bidder can simply walk away from the property and lose only the original tax payment.

For example, take a property with a tax delinquency of $1,000. The winning bid is $10,000. The investor pays $1,000 up front and then is not responsible for the other $9,000 until he takes possession of the property - if he takes possession.

What has happened in Frederick, Howard, Charles and other Maryland counties this year is that investors have bid millions of dollars on properties. They pay the back taxes and then hope the owner comes up with the money. If he does, the investor gets his money back plus interest.

Advertisement

In the example above, the investor would get back his $1,000 plus $240 profit in Baltimore, where the interest rate is 24 percent.

The Herald-Mail Articles
|
|
|