Show ME THE MONEY! MUNCIPAL TAX LIENS: POST-ACQUISITION COLLECTION and ETHICAL CONSIDERATIONS The Marcus Law Firm Edwin P. Farrow Esq. Maria R. Salatto Esq. & Thomas M. Melfi Esq. Hosted by Walter M. Spader Esq.

“NOT SHOW YOU, SHOW ME THE MONEY!” ROD TIDWELL: OUR CLIENTS JERRY MCGUIRE: THE MARCUS LAW FIRM

TAX LIEN Industry PERCEPTION

TAX LIEN Industry REALITY Over $4 Billion in delinquent property taxes sold to Private Investors each year in US. The NTLA has indicated that more than 99% of all tax liens sold to investors are redeemed prior to foreclosure judgment. West Haven, CT Tax Lien Foreclosures Between 2008-2016: WH assigned 12,295 liens, of which approximately only 400 (3.3%) had a foreclosure action brought and of those, our clients took title to only 12 properties (0.10%) NYC Tax Lien Foreclosures Between 2008-2016: 41,400 property tax liens were sold  only 354 (0.86%) were foreclosed on. Individual Investors (according to the NTLA) typically earn 4%-7% a year after expenses on this type of investment.

YOU’VE WON THE BID…NOW WHAT? What did you acquire? Secured Debt (real property tax liens) OR Unsecured Debt (service/water/sewer tax liens) FAIR DEBT COLLECTION What is the FDCPA ? (15 USC § 1692) Does the FDCPA apply to my lien? Staub v. Harris, 626 F.2d 275 - property taxes not “debts” under the FDCPA FDCPA is a strict liability statute PRACTICE HINT – Don’t use taxing authority symbols in your mailings to avoid confusion and to not create a false impression that a debt collector is associated with any government or municipality (Gammon v GC Services).

Pre-Foreclosure Bankruptcy Concerns Always file your proof of claim! Chapter 7 – largely protected Chapter 13 – Most taxpayers won’t complete their plans, taxpayer is trying to avoid foreclosure, likely paid off by mortgage company. Watch for CRAM DOWN WATCH YOUR RIGHTS and PROTECT YOURSELF! Interest rights can be altered in Bankruptcy, a plan can even be 0%!

Opening your File Know your Jurisdiction! Know your Liens! Know the Pre-Foreclosure Steps Keep Records!

Referral to Your Attorney Deciding to go the Foreclosure route – relationship with Law Firm is a “partnership”. What does your attorney need from you? Balance due, Ownership information, additional parcels owned by tax payer Broker Price Opinions/Valuations Contiguous parcel information Report of all of your contact with the debtor – will help attorney plan defenses, help marshal find debtors/parties for service, and help you contact any heirs if necessary. MOST IMPORTANTLY!!!! – you need to inform your attorney about how aggressively you would like the liens to be pursued. Quick foreclosure when you want to obtain title Less aggressive foreclosure when you are in a positive long term equity position

What Will Your Attorney Do? Demand Letters Payment Arrangements Title Searches & Appraisals Commencing Foreclosure

ADDITIONAL FORECLOSURE CONSIDERATIONS Defenses: Do they impact validity of lien? Are they valid? Bankruptcy Filings during foreclosure: make sure its real, get a docket number Chapter 7? Chapter 13? Fees and costs? Recoverable? Minimizing overhead

Alternative collections CONSIDERATIONS Collections Actions Condemnation Collections Fire/Insurance Collection Reassignment of Liens Bottom of the barrel liens

So HOW DO YOU SHOW ME THE MONEY? Building trust with the municipalities Your on going relationship with your attorney The attorney’s relationship with the judges/magistrates Ultimately, the relationship you have with the DELIQUENT TAXPAYER can be a large factor in how successful you are in your collection efforts

THANK YOU FROM “THE DREAM TEAM”