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D.C. collects $6.6M during tax sale, more than $18M still owed

Tuesday - 7/30/2013, 5:24pm  ET

The District sold the liens to 965 properties during its recently concluded tax auction, collecting more than $6 million in back taxes on real estate ranging from condos to dilapidated rowhouses to stately mansions.

The annual sale, which ran this year from July 15-17, also generated $11.8 million in surplus, as bidders competed for the lien rights to the most wanted properties. That surplus is ultimately returned to the buyer.

Some notable sales to start:

  • 1745, 1749 and 1755 N St. NW: Owned by N Street Follies Ltd. and its principal Morton Bender, these three Dupont Circle rowhouses sold for a total of $320,679.64, including $170,000 of surplus. Bender has owned the properties since 1988, but his attempts to redevelop (as an office building, then as a hotel) have run into one problem after another. The buildings, meanwhile, have deteriorated, but they're still worth millions. Bender could not be reached for comment.
  • 131 R St. SW: Owned by Leoterra LLC, this parcel is steps from, but apparently just outside of, the planned D.C. United stadium footprint on Buzzard Point. The property sold at auction for $148,900.75, including $70,000 of surplus.
  • 2426 Wyoming Ave. NW: This 6,752-square-foot single-family home, owned by Richfield Enterprises LLC and assessed at $3.7 million, was a big draw at the auction. The buyer paid off not only the $31,864.12 tax bill, but an additional $150,000 in surplus for the lien.

The original tax sale list issued in June included some 4,400 properties totaling $38.2 million in unpaid taxes. While all delinquent properties were listed, only those with bills of more than $1,000 (or vacant properties with bills of more than $200) were to be sold during the three-day event.

Prior to the auction, 421 properties were removed from the sale list. Another 1,073 properties offered for auction did not find any interest from bidders. The District is still owed $18.3 million in back real estate taxes.

The winning bidders will collect interest on their purchases at a rate of 1.5 percent per month, or 18 percent annually, on the sale amount, exclusive of the surplus, until the property owner pays the bill.

Assuming the property owner redeems, which happens roughly 95 percent of the time, the lien buyer receives a refund of the amount of taxes paid, plus the accrued interest.

If the property owner does not pay up after six months, then the lienholder can launch a foreclosure action in court and ultimately take control of the property — a process that can take as long as three years.

D.C., historically, does not make it easy to figure out which properties sold during the action. I've tried to simplify the process, but it'll take some legwork on your part.

First, open this document, the original tax sale list. Find the address you’re interested in, and note its square and lot number.

Then, open this document, the (unsearchable) list of properties sold, and find your square and lot. The squares will always be listed first, in numerical order.

One of two things happened if the property does not appear on the sold list: Either the owner redeemed presale or the parcel received no interest at the auction.

© 2013 American City Business Journals, Inc.

Tags: d.c.lienstax salereal estate