Luzerne County Council to weigh in on tax-delinquent “private sales”

By Jennifer Learn-Andes - | June 18th, 2016 7:52 pm

West Hazleton resident Anthony Bonomo bid $11,700 to acquire seven residential properties in Hazleton last year.

He now has a pending bid to buy five more, also in Hazleton, for $9,420.

His method is a little-known and rarely exercised tax-delinquent purchase option allowed by law known as a private sale.

In exchange for an early pick of properties before they advance to the popular free-and-clear tax auction, private sale buyers must accept outstanding mortgages or liens attached to their purchases and pay at least half of the taxes owed.

It’s a better deal than a first-stage upset tax sale, when bidders must both accept liens and pay all back taxes owed. All liens and taxes are cleared in free-and-clear sales.

The concerns with private sales:

• The payment of half the taxes was calculated last year, which means 2015 taxes that are now delinquent were not factored into the equation.

• Luzerne County’s free-and-clear auctions have continued to attract growing crowds that make it more possible taxing bodies could recoup more than half of the taxes owed if they don’t accept private bids.

Some Pennsylvania counties, including Berks, require payment of all outstanding delinquent taxes in private sales.

Last year’s free-and-clear auction in Luzerne County drew a record attendance of prospective bidders, prompting officials to hastily move the sale from a courthouse jury room to the larger rotunda. The bidding went so high on some properties, including a few in Hazleton and Wilkes-Barre, the delinquent taxes were paid in full with money left over.

• Private sales are advertised in legal notices that may not be noticed by other prospective buyers, which could prevent competition that would force a special private bid auction among two or more interested parties.

County review

The county council has not voted on private sales because they were handled by the administration in the past.

Prior county manager Robert Lawton decided last May he would be more comfortable obtaining the council’s approval on all sales involving tax-delinquent property that are not part of public auctions.

County Council Chairwoman Linda McClosky Houck said the council was not briefed on the private sales and should be voting on them because they involve real estate, which falls under the council’s purview.

McClosky Houck said she wants to know the rationale for accepting less than 100 percent of the taxes owed in private sales and what, if any, steps can be taken to ensure other prospective buyers are aware of pending private sales.

County tax-claim operator Northeast Revenue Service LLC had asked the administration to consider increasing the private sale bid requirement to 100 percent in 2013, but it’s unclear what happened to that request.

“I look forward to a full and open public discussion,” McClosky Houck said.

Bonomo, a Hazleton Area School Board member, could not be reached for comment on his view of private sales.

His pending private sale bid is for properties that did not sell in the October upset auction.

Private bids must be submitted before Northeast Revenue starts filing court petitions to place unsold properties in the August free-and-clear around February, the company said.

Due to this timeline, Bonomo’s requirement to pay at least half the taxes was calculated before unpaid 2015 taxes became delinquent.

His proposed bids and other information about these properties, according to public records:

• $1,755 bid for 783 Seybert St., a single home assessed at $60,600 carrying a total back-tax debt of $5,187.

• $2,310 bid for 550 Arthur St., a single home assessed at $83,200 with $6,860 in back taxes.

• $1,745 bid for 234 E. Beech St., a row home assessed at $25,000 with $4,317 in back taxes.

• $972 bid for 407 W. Oak St., a half-duplex assessed at $41,100 with $3,073 in delinquent taxes.

• $2,638 bid for 844 W. Diamond Ave., a half-double assessed at $118,200.

The bid for the West Diamond Avenue property may be off the table because the property owner has paid all back taxes except for a 2015 bill totaling $2,400. Owners can remove their properties from tax sales by paying their debt.

Delinquent property owners receive certified mail notification of private bids on their property, according to Northeast Revenue. School districts and municipalities also receive notices when private bids are received and have an opportunity to object.

If no objections to the sale are filed with the court before July 5, Northeast Revenue will send a letter to the county seeking approval to accept the bid, the company said. A petition must be filed and approved by the county Court of Common Pleas for a county-approved private sale to take effect.

McClosky Houck Houck

By Jennifer Learn-Andes

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.