Proficient Note Buyers
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May 09, 2012
That's Not How We Do Things Down Here
Since the housing market hit the skids in 2006-2007, the continued brazen and unfathomable actions of cities and counties across our nation prompted me to use my little blogging platform to 'out' some of them. Even though countless millions of Americans have had to sacrifice to make it through these tough times, these entities apparently think 1) they shouldn't have to deal with a tighter budget and 2) we're too stupid to call them on it.

Example #1: We recently sold a property in Detroit, MI for $21,000. The property was in need of a total rehab - even though it was located in a nice neighborhood, it had suffered years of neglect and had been vacant for almost two years. In 2011, the city determined the current taxable value of the property was $69,060, which means they actually felt the property was worth $138,120 (taxable value being 50% of a property's market value).

Because of this, the city of Detroit slapped a $6,000 annual property tax on this house we sold for $21,000. For those of you doing the math, that translates into an effective tax rate of 28.6%. Now, if my annual property taxes on my personal residence were taxed at that same rate, I would have written a check for over $82,000 this year. Crazy? Absolutely. But somehow the City of Detroit is not only doing this, but GETTING AWAY WITH IT. I dare you to tell me the system isn't corrupt.

Example #2: In February 2011, we purchased two land parcels in Talladega County, Alabama. On the Deed given to us by the seller, it was extraordinarily clear that all future tax statements were to be sent to us. Yet now more than a year later, I still haven't received any correspondence from Talladega County.

Not knowing the tax schedule, but also not wanting to go delinquent on our property taxes, I called Talladega County for an explanation. Long story short, they won't recognize the name change from the prior seller to us until later this year. HOWEVER, our taxes were due and if not paid by May 16, our parcels were going to tax sale. Oh...and the check I sent them for payment was unacceptable, considering we were delinquent and all...I had to send them a MONEY ORDER for them to process our payment.

As the county was explaining all this to me, I was getting hotter and hotter under the collar. The county employee was actually blaming me for not 'notifying' them that future tax bills should be sent to us. I asked her the point of PUTTING IT RIGHT THERE AT THE TOP OF OUR OWNERSHIP DEED if nobody at the county was smart enough to change their records. "That's not how we do things down here", was her response. I hung up before unleashing a verbal tirade that would have scorched the phone line.

I had originally planned to spotlight at least three counties specifically, but then realized I could go on for days, and you likely are about done reading my rant. However, I will give you just a few other quick examples of outright extortion being exercised by these municipalities:

Charging a $250 "administrative" fee for a $75 mowing, even though we were having the lawn mowed on this particular property every two weeks (they charged this fee four times, never even giving us notice that they didn't feel we were mowing often enough).

Executing a demolition order on a house our Realtor felt was perfectly fine - county code enforcement said they'd rather see the house demolished than rehabbed in order to add to their 'open space' - and you thought you actually had property rights if you owned property? HAHAHAHA

Levying fines on a property we owned that was the favorite dumping ground of some hillbillies in the immediate area. The county said we weren't doing enough to 'discourage' dumping. What, are we supposed to hire a 24-hour armed guard to chase off these pukes?

I get it - cities and counties are facing budget crunches, too. Not because they're assessing less in property taxes, but because they just aren't collecting as much. If you were asked to pay an effective property tax rate of 28.6%, would YOU pay your taxes? The only way we stop the corruption is to expose it; hopefully this is a start.

What about where you live? Does the amount your taxing authority says your house is worth translate into real market conditions? If not, start researching what homes are selling for in your immediate area. Challenge the county's assessment; just because they are the 'government' doesn't legalize the theft of your hard-earned money through inflated assessments. That's not how we do things down here.

Make it a great week,

Clint


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