The proposed reforms come at a time of rising foreclosure rates in general and as the tax sale process has come under scrutiny. Federal authorities are looking into possible mail fraud and restraint-of-trade violations in tax-sale auctions in Baltimore and several Maryland counties.
Also, the judge who oversees the civil docket for the Baltimore Circuit Court recently issued a ruling aimed at reducing the mounting fees that homeowners face at the point they ask the court to resolve their cases. Judge Evelyn Omega Cannon ruled that attorneys handling these tax-sale foreclosure cases may charge only flat fees instead of billing by the hour, among other things.
Tax-sale cases grow out of the annual auctions in which investors bid for the right to collect unpaid property taxes and municipal fees. After gaining rights to the liens, investors file suits to force payment or seize properties. In the first four months after the tax sale, homeowners can redeem the debt and pay interest only. At six months, the investor can file for foreclosure, and fees escalate.
Part of Della's bill would impose more stringent notification requirements during the process.
Herbert Burgunder III, an attorney who has handled tax sale cases, said he has concerns about that proposal. "Senator Della's bill repeats notices already provided by Baltimore City. In fact, it represents a fifth or sixth notice to delinquent taxpayers."
About two-thirds of all properties sold at tax sale are redeemed in the first six months, he said, which means most people are already informed.
Burgunder suggested that instead the city should conduct a public education campaign to advise delinquent taxpayers of the tax sale and the process to redeem before costs are incurred and thereby reach people who escape notification.
"The state should also set up a fund to help pay the tax bills for those who truly can't pay their bills," Burgunder said, adding that notices should tell residents how to get help.
Regarding the proposed limits on legal fees, a group of state finance officers expressed mixed feelings. Harold L. Higgins, treasurer and finance officer for Worcester County and chairman of the Tax Affinity Group, said "setting limits on legal fees seems to be a step in the right direction" but that there is "a down side."
He said the group, an informal organization of finance officers, is concerned that "legislation like this would almost guarantee most legal charges would automatically go to the $500 or $1,000 limit, with little regard to the amount of work being done."
Baltimore lawyer Jay A. Dackman, who has been among the city's active lawyers in tax-sale cases, said he would welcome greater control of fees. "The law the way it's currently drafted is too open-ended," he said. "It creates abuse in terms of excessive fees being charged by attorneys."
june.arney@baltsun.com
Sun reporter Laura Smitherman contributed to this article.
