Imagine buying a piece of property and learning months later that you owed thousands in delinquent taxes on the property from before you owned it.
It was a situation just like that inspired Scotland County Manager Kevin Patterson to suggest at the December meeting of the board of commissioners that the county take a new approach in handling the transfer of real property.
“Right now if you don’t have an attorney handle the closing on a property and do a title search … someone could sell you property with 10 years of taxes owed and you may not realize it, then you own all of the past due debts associated with that property,” Patterson said.
Patterson has advised the commissioners to consider requiring a certificate indicating that there are no delinquent taxes associated with a property prior to the transfer of a deed.
The county would have to ask permission from the state and then vote to approve the measure, as 73 other North Carolina counties have already done.
While the measure may save the county some money in the long run by helping it to more efficiently collect taxes owed, Patterson said that the main effect of the act would be to help those buying property.
“It will hopefully help the new owner, and certify that they are protected (from delinquent debt),” Patterson said.
The measure would apply only to taxes that have already passed their due date, becoming delinquent. Taxes currently due but that are not late would not be included.
“The vast majority of times property transactions occur are when people are buying and selling a home. These transactions occur a limited number of times in a person’s life and most of them are handled by an attorney, who does a title search verifying tax liens and any taxes owed so that those may be resolved in the closing,” Patterson said.
This measure is for those people who choose not to have an attorney perform a title search and who may otherwise purchase property without realizing that they are also taking on tax debt. It would eliminate the possibility of foreclosure being pursued because of an inability to pay the debt, as well.
“In those cases we do our best to go after the original owner, but if they are several years delinquent it is because we have not been able to find them.”
When it was brought up by Patterson at this month’s commissioner’s meeting, Commissioner John Cooley expressed concern about the current process.
In the event that someone manages to sell property with substantial debt associated with it, Cooley said that the seller “couldn’t give a rip if the taxes are paid.”
“That’s a problem. I can’t see why it should be so difficult.”
The commissioners chose to discuss the item at an upcoming board retreat.
“(The current system) is really kicking us in the teeth, because we are sending out a bill (to the previous owner) who could be long gone,” Cooley said.
The county is expected to reach out to the local bar association to receive feedback on the measure and to give them advanced notice that changes may be in the future.
Asked what criticisms he expects of the change, Patterson said that some may ask if the county really has any business involving itself in property transfers.
He also expects to hear concerns that the new measure may delay time sensitive transactions.
“This is not something where you are told to wait for two weeks. It should be done fairly quickly, but these are all things we will have to work through.”