ALBANY, Ga. -- When most families purchase their dream homes, the vision of a county official hawking their little slice of the American dream to the highest bidder likely never crosses their mind.
And yet each year hundreds of thousands of dollars of real property -- homes, land and commercial real estate -- end up on the Dougherty County tax director's auction block simply because property owners fail to pay their property taxes.
As of Thursday, $1.7 million worth of delinquent taxes remain outstanding in Dougherty County and, if not paid by Aug. 1, will put property owners in a pretty pricey pickle if the properties find themselves in the hands of a lucky bidder on the courthouse steps.
It's not a simple or cheap process for government officials either. Each step of the process has been pre-determined by state law and must be followed to the letter if local governments expect to get their taxes.
But when it's done right, tax officials say that it allows them to reconcile their coffers and can provide a lucrative means of self-support for savvy investors or home buyers looking to turn a profit or even buy a piece of property on the cheap.
The 'list' and how one ends up on it
Every county tax department conducts tax sales a little differently when it comes to how frequently to hold the sales.
In Dougherty County, Tax Director Denver Hooten said that her tax department typically holds one large sale one time each year, while other counties may have tax sales once a quarter or biannually.
The decision usually comes down to staffing levels, the typical number of delinquent parcels and the cost associated with holding a sale.
A month prior to a sale in Dougherty County, Hooten and her staff compile information related to the delinquent taxes -- the property address, the taxpayer or owner's name, the map, block and parcel number and the years that they have been delinquent -- and, as required by Georgia law, formulate a list that is published in The Herald four times.
The road that eventually leads delinquent taxpayers to "the list" -- as it's known in Hooten's office -- is a winding one that is paved with multiple opportunities for taxpayers to redeem themselves and pay their bills, Hooten said.
The process starts on Dec. 21, one day after property taxes are due. At this point, the taxpayer is declared delinquent and assessed a 1 percent penalty each month that taxes go unpaid.
On the 21st, all delinquent filers are sent a delinquency notice and are given 30 days to pay or face having a lien for the amount of taxes owed put on the property.
When that 30-day window closes without payment, Hooten files the lien with the Dougherty County clerk of court.
Once the lien is filed, Hooten notes the owed amount as a levy, and a notice is sent to the property owner and to any tenants living on the property.
After 90 days, if the taxes are still unpaid and no payment plan has been worked out, the tax department assesses a one-time penalty worth 10 percent of the tax bill.
At least 20 days before the tax department begins advertising "the list," staff contacts any existing lienholders on the delinquent property -- mortgage companies, banks, etc. -- to give what they call a "notice of holder," essentially saying the property is going to be put up for sale for delinquent taxes.
Finally, a month before the sale, the list is published once per week for four weeks in The Herald, advertising the sale and showing the properties to allow prospective buyers a chance to research the properties to determine if they're worth bidding on.
Just because a property is on the list doesn't mean it will end up being auctioned.
Two good examples are the former Heritage House hotel on West Oglethorpe Boulevard and the shopping plaza at 2700 Dawson Road.
Last year, the owner of the Heritage House, Greenbrier Holdings LLC., waited until after the property had been listed but before the date of the auction to pay the delinquent taxes and fees.
Hooten said this is a common move by property owners and investors who wait until the last minute to cut a check for what they owe.
Bill Turton, who owns the Westover Pointe Shopping Center at 2700 Dawson Road, told The Herald that was his reason for waiting to pay the taxes and fees on that piece of property.
"Well, the way things are, we wanted to hold out as long as we could before having to make that payment," Turton said.
Turton said he'll likely pay the more than $83,000 in delinquent taxes and fees on the property next week.
For those who won't or can't pay their taxes prior to the auction date, the property ends up in the hands of a county official on the steps of the Dougherty County Courthouse.
According to Hooten, both local buyers and investors from around the region come to speculate on property in hopes of getting a good deal or turning a decent profit.
"If someone knows what they're doing and does their homework, there's some money to be made," Hooten said.
The core principle in the auction itself is that bidders aren't attempting to buy the property itself, merely the county's lien for the taxes and fees owed.
Bidding starts at the amount owed the tax department and goes up from there, with the lien awarded to the highest bidder.
The difference between the high bid and the amount owed goes into an escrow account as "excess funds" and can be used by the property owner or other lienholders to "redeem" the property, Hooten said.
"After the lien is sold, the property owner or taxpayer or other lienholder, like a mortgage company, has what they call a 'year of redemption' in which they get 12 months to pay the winning bidder the taxes and fees owed on the property, plus a 20 percent fee," she said.
That 20 percent fee -- which is based on the total winning bid and not just the amount owed in taxes -- is what many investors seek tax sales out for, Hooten said.
"Most of them don't want the property, they just want that 20 percent fee," she said. "It can be substantial."
But if the winning bidder is looking to get the property itself, they'll have to wait 12 months, 12 long months of legal notifications and notices to any lienholders or those with possible legitimate legal claims on the property, before owning the property outright.
Even then, they own what lawyers call a "cloudy title" to the property and would likely need a lawyer's help getting a clean title that would allow them to flip the property.
The end result
At the end of the day, Hooten said the county typically walks away with enough to cover most of the delinquent taxes and fees, but that tax officials are beginning to see a spike in the number of properties that don't sell are just aren't worth putting on the list.
"Back in the day, we'd have these sales and end up with six or seven properties that didn't sell," Hooten said. "The last couple of years ... that's changed."
According to tax records, last year's tax sale netted $138,500 in back property taxes and fees but left $678,000 in uncollected taxes.
Some of the taxes that go uncollected are for small, vacant properties that are either blighted or are now worth less than the taxes owed, making them nearly impossible to sell to developers. Many of those properties aren't included on the list, while others are included but still go unsold.
Typically, tax officials have collected 98 to 99 percent of all the assessed taxes by the date of the sale, which Hooten feels is a good percentage. But when local governments are scrounging for every last dime they can find, and when the digest is shrinking, the loss of more than a half-million dollars in revenues due simply to non-payment is painful.
"I will say that, because of the economy, things have gotten tougher," Hooten said. "And, yeah, its frustrating as a taxpayer knowing that there are 300 to 400 delinquent properties just hanging out there that we can't really do anything about. But, at the same time, most of the people who get bills pay their bills, and that's a good thing."