SOUTHINGTON – The town will auction off a dozen properties during a tax auction in June, but real estate professionals say it may not be the best option for home buyers looking for a deal.
Brian Lastra, the town’s assessment and revenue director, said it’s the first such auction in about five years. Unpaid taxes on the properties range from $30,000 to $81,000 and the town is looking to get those amounts through the sale.
State law allows municipalities to sell the property of tax delinquents. The properties to be auctioned in Southington include houses, vacant lots and a bakery and grocery called Eddie’s.
The list of properties up for auction was advertised in the Sunday edition of the Record-Journal. The sale is scheduled for June 9 at 7 p.m. in Town Hall.
A tax sale does not include a house showing, so buyers can’t see the interior condition before bidding. The winning bidder will also have to wait six months before they own the property because the original owner can come up with the taxes owed and reclaim the house.
Tax auctions are open to the public but those looking to bid must come with a $3,000 certified check as a nonrefundable deposit in case they win an auction. State Marshal David Hubbs will run the auction. He said the bidding begins at the amount in unpaid taxes.
He estimated that about half the houses sold at a tax auction are redeemed by the occupants.
“People don’t want to lose their homes,” Hubbs said.
Real estate professionals say bank representatives and investors are the most common bidders at this type of auction.
Diana McDougall, a Southington real estate agent, said buyers need to research the properties up for auction before bidding. Property owners who have fallen behind on their taxes could also have other unpaid bills, meaning there could be liens in addition to back taxes. McDougall said potential buyers should do a title search before the auction.
“You’re going to do your homework,” she said. “Anybody who doesn’t do that is very foolish. You don’t know what you’re buying.”
The legal notice printed Sunday listed some of the properties’ other lien holders, which included energy companies, hospitals, doctors and banks. Ryan Bauder, a real estate lawyer in Plantsville, said most liens are released when a property changes hands, but not all. And even if the liens are legally released it can take time to make it happen.
“It depends on the lien,” he said. “There can be problems to getting them released.”
The proceeds of a tax sale first go to paying off back taxes, Bauder said. Then they’re used to pay other liens in the order they were put in place.
Banks often have a mortgage on houses up for auction, and they bid in order to get control over their properties. But the final selling price at a tax auction depends on how many people show up, Bauder said.
Lastra held a tax auction while working for the city of Torrington and saw the pitfalls of uneducated bids at a tax sale. Some buyers mistook a piece of property for another and hadn’t looked up town records to determine which lot was actually being auctioned. Lastra said it’s important to find out everything about the property before putting down a $3,000 nonrefundable deposit.
“They thought they were buying something else,” he said.
Southington holds tax auctions on an as-needed basis, Lastra said. Properties delinquent for more than three years or owing more than $20,000 can be sent to tax auction.
A tax sale avoids the court proceedings of a foreclosure, which some municipalities such as Meriden use against delinquent taxpayers. Michelle Kane, Meriden’s tax collector, said the city is considering holding a tax sale since back taxes can be collected in about 12 weeks. Kane said the city has been in the foreclosure process with some homeowners for more than a year and still hasn’t received any money.