The Lake County Council is considering repealing the county’s current tax sale ordinance to create a new one with an added penalty as requested by the Lake County Auditor’s Office that goes beyond state statute.
The council voted 7-0 last week in favor of the ordinance on first consideration, but held off on a potential second vote for final approval because some council members had questions about the proposed ordinance.
In the proposed ordinance, if a tax sale buyer doesn’t file a court order to issue tax deed signed by a judge, along with other documents and payments, within 150 days of the court order to the Lake County Auditor’s office the buyer will receive a refund of the tax sale purchase minus a 25% penalty.
Lake County Council attorney Tom O’Donnell said currently if someone buys a property as part of the tax sale process and then gets “buyer’s remorse” early in the process, that buyer would still pay 25% of the bid price.
“This is people that get buyer’s remorse possibly later in the process, would also owe 25%. The goal is to have parity from the two different penalty phases,” O’Donnell said. “It’s not in the statute right now; we’re lobbying the legislature to do that.”
Under the current tax sale structure, the auditor’s office staff have spent a lot of time and labor in reviewing tax sale bids, O’Donnell said. For about 40% of the applications, the staff members get part way through and realize some items are incomplete, he said.
“They’d start the vetting, then they’d have to stop the vetting and then they’d have to redo the vetting. That’s why they would like to have it be a hard stop, everybody understands if you don’t do it, you’re just out,” O’Donnell said.
O’Donnell said the rest of the proposed ordinance follows state statute on tax sales. The proposed ordinance would require all tax sale bidders to register online but prohibits bidders from filing multiple applications or revising previously filed applications once they have been filed and the auditor’s tax sale department begins the bidder registration vetting process.
Under the proposed ordinance, if a tax sale bidder doesn’t properly complete, file and download the online application, it will be immediately denied.
All bidders would be required to pay a $500 registration fee, which would be applied to any winning bid, refunded if a bid is lost or applied to possible delinquent taxes a bidder may have. Also, bidders would have to pay a $100 non-refundable “paddle fee” to participate in the tax sale, which would go into the council general fund to be used for defraying expenses of the tax sale or reduce the number of vacant and abandoned houses, according to the proposed ordinance
Bidders could not bid on “behalf of” or “at the direction of” another person or business. The name a tax sale bidder registered under would appear on the tax sale certificate and tax sale deed, according to the proposed ordinance
“Bidders must bid on their own behalf and pay for the tax certificates on their own behalf from their own funds and bank account,” according to the proposed ordinance. “The mere purchase of a tax sale certificate does not convey any ownership rights to the parcel, unless or until, the purchaser has met all Indiana code requirements and the Lake County Circuit Court has ordered the issuance of a tax deed and the tax deed has been issued and recorded.”
The remaining part of the proposed ordinance outlines the timeline of documents and payments due in the tax sale process, which includes the 150 day court order deadline and 25% penalty.
Lake County Councilman Charlie Brown, D-Gary, asked what would happen if a bidder refused to pay the 25% penalty. O’Donnell said that could open the bidder up to a potential lawsuit.
Lake County Councilwoman and president Christine Cid, D-East Chicago, said she had questions about the proposed ordinance. Cid said a bidder should be able to correct an application if a mistake was made or the application process should include a system that would not allow a bidder to move forward in the application process until all the fields are filled out.
“We should encourage more people to be involved in the tax system, and not limit that opportunity,” Cid said.
Cid said she’s indifferent about the 25% penalty, but if the state legislature hasn’t included that in Indiana code, then Lake County officials have time to consider it.
“Maybe we should wait until it’s passed in the legislature. Why do something when it’s not passed down there and then would we have to change our ordinance? I think it’s just a little premature,” Cid said.
Cid said the council will consider the proposed ordinance for final approval at its November meeting.
