An additional $1,940,290 comes from 579 property owners who had been delinquent, but paid their taxes in full to avoid a lien.
The remainder comes from 1,194 property owners who have made down payments totaling $419,959 since March 23 on $7.8 million owed in back taxes.
“A tax lien sale is a tool that motivates property owners to come in and meet their obligations,” county Treasurer Carolyn Rice said.
The payouts will be distributed in August along with collections for property taxes due in July. School districts will benefit most from the collections, getting about 65 percent of the total.
In a tax lien sale, county treasurers sell past-due taxes to a third party. The advantage for local governments and schools is that they don’t have to wait for the property owners to pay their tax bills to get the revenue.
Montgomery County held lucrative tax lien sales for three years beginning in 2005, with American Tax Funding Services buying about $25.6 million in liens. Companies that buy delinquent real-estate tax liens from governments pay 100 percent of the face value of the taxes owed. Liens are sold in large bundles and cannot be bought individually.
The county’s last successful sale was in November 2007, when 875 parcels sold for $2.69 million.
This marks the first time in Montgomery County that the tax lien sale was done through negotiation rather than by auction.
“We weren’t sure we would get a bidder,” Rice said. “Ohio Lien Fund came forward showing a lot of interest.”
The change in the type of lien sale makes a difference to property owners.
The percent interest that will be charged to property owners, in addition to their delinquent taxes, will have a 17.5 percent annual interest rate, compared to 18 percent at previous sales.
The lien holder has three years — instead of the six required by Ohio law if the sale is through auction — to collect the taxes, foreclose or lose the investment.
Also unique to this sale, property owners will make payments directly to Ohio Lien Fund and not to the county.
“They’re taking on the cost of administration, instead of us,” said Rice, noting that she must approve all correspondence to the property owner. Passing on administrative duties to the lien holder will ease the burden of her 26-member staff, she said, down from 33 in 2007.
Rice said she’s considering a second tax lien sale in the fall, noting, “I think all the jurisdictions need us to maximize collections.”
Contact this reporter at (937) 225-2362 or josmith @DaytonDailyNews.com.
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