Bob gets busy, we get uninvited

Posted July 26th, 2007 by Joe Kaiser

assignments of interests executed or recorded after issuance of the certificate of tax delinquency must not infringe upon the record owner's right to receive excess proceeds . . .

Dear Rob,

House Bill 1564.

Its purpose?

To make sure our Pierce County “overage play” rampage in 2002 wouldn’t be repeated anytime soon.

And you’d better believe Bob Dick was on it.


House Bill 1564

What follows is the official report on the House Bill that resulted. It’s formally known as HB 1564, but we always referred to it as the “kill Fiscal Dynamics, Inc. bill.”

Few get it, and you’d better believe, neither AAG David Huey nor former AAG Cheryl Kringle ever came close to figuring it out.

They still think it has something to do with Tom and Suzie.

Psssst . . . it doesn’t.

Can you figure it out, Rob?

And hey, no fair asking Pierce County Prosecutor Bob Dick to explain it to you.


Washington Senate Bill Report
2003 Regular Session,
House Bill 1564

March 26, 2003

Washington Senate

Fifty-eighth Legislature, First Regular Session, 2003

As Reported By Senate Committee On:

Government Operations & Elections, March 26, 2003

Title: An act relating to clarifying county treasurer fiscal provisions.

Brief Description: Clarifying county treasurer fiscal provisions.

Sponsors: House Committee on Local Government (originally sponsored by Representatives Alexander, Fromhold, Mielke, Kessler and Buck).

Brief History:

Committee Activity: Government Operations & Elections: 3/26/03 [DP].


SENATE COMMITTEE ON
GOVERNMENT OPERATIONS & ELECTIONS

Majority Report: Do pass.

Signed by Senators Roach, Chair; Stevens, Vice Chair; Fairley, Kastama and McCaslin.

Staff: Ronda Larson (786-7429)


Background: The county treasurer is the custodian of the county’s money and the administrator of the county’s financial transactions. In addition, the treasurer serves special purpose districts and other units of local government.

Statutes governing treasurer duties contain several ambiguities. In the statute giving taxing districts authority to issue bonds, the term “fiscal officer” is used to designate who is to pay the interest and other charges on a taxing district’s bonds. The term “fiscal officer” is undefined.

In the personal property tax lien statute, when property is sold at auction to pay delinquent taxes, the sale proceeds must go first toward the tax debt before the property owner can receive any of the proceeds. It is unclear whether mortgagers and other creditors also are limited to only the proceeds that remain after payment of taxes.

In the real property tax segregation statute, a person can request that the county segregate his or her partial interest in the property so that he or she can separately pay taxes on only that portion. Segregation cannot occur until all delinquent taxes on the entire parcel have been paid. It is ambiguous whether the phrase “all delinquent taxes” encompasses the current year’s taxes.

In the real property tax lien foreclosure statutes, a person owning an interest in land being foreclosed can pay the taxes due on the property and thereby create a lien on the property. The statute does not specify whether the interest must be recorded before it gives rise to the right to create the lien.

In the tax lien foreclosure statutes, if any proceeds from a foreclosure sale remain after paying off the tax lien, the treasurer must refund the excess to the “record owner of the property” upon request. The statute is ambiguous as to whether other creditors have rights to intervene and receive the refund before it goes to the record owner.

If a person pays more property taxes than he or she should have paid, the county treasurer must refund the taxes using funds from the special purpose taxing district that collected the tax originally. It is unclear whether interest on the refund, in addition to the refund itself, also must be paid out of the taxing district’s funds.

When the county treasurer collects payments from people who owe taxes or other amounts, the treasurer can accept credit card payments. It is unclear whether this rule applies to payments to special purpose taxing districts in addition to payments to the county.


Summary of Bill: Several ambiguities are clarified in statutes governing county treasurer duties. The term “fiscal officer” is replaced by “treasurer” to clarify who is authorized to pay interest and other charges on the bonds. In the personal property tax lien statute, the term “person” is defined to include property owners, mortgagers, and other creditors. For purposes of segregating property to pay taxes, a person must pay current year taxes in addition to delinquent taxes, before being granted segregation. Only a person owning a recorded interest in land being foreclosed can pay the taxes due on the property, and thereby create a lien on the property. Only the record owner is entitled to receive the excess proceeds from the foreclosure sale after the proceeds are used to pay off delinquent taxes; assignments of interests executed or recorded after issuance of the certificate of tax delinquency must not infringe upon the record owner’s right to receive excess proceeds. Interest on tax overpayment refunds must be paid from the funds of the special purpose district whose tax levy was overpaid. In addition to checks and cash, a county treasurer can accept credit cards as payment for taxes and other amounts due to special purpose taxing districts within a county.


Appropriation: None.

Fiscal Note: Not requested.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Testimony For: The bill clarifies some of the administrative matters of treasurers. Collection of property taxes is a huge part of the treasurers’ job. The most important ambiguity that this bill clears up involves how the tax on personal property is dealt with when a transfer occurs and a partial interest owner wants to segregate. Treasurers continually have to clarify to people that ALL taxes on property must be paid before it is segregated. This bill is priority legislation of the Washington Association of County Officials. The Washington State Association of County Treasurers brought this bill to the Legislature.

Testimony Against: None.

Testified: PRO: Representative Gary Alexander, prime sponsor; Robin Hunt and Lisa Frazier, Washington Association of County Treasurers.

WA S. B. Rep., 2003 Reg. Sess. H.B. 1564
END OF DOCUMENT


Got it all figured out, Rob?

Think Penn and Teller.

Respectfully,

Joe Kaiser


9 Responses to: “Bob gets busy, we get uninvited”

  1. anemonehead responds:
    Posted: July 26th, 2007 at 8:05 am

    Hmmmm…Penn and Teller. Are we talking BULLSHIT here Joe?

  2. SpyBoy responds:
    Posted: July 26th, 2007 at 8:17 am

    Greetings,

    So, is this now the statute law in the State of washington ?

    Thank You,
    SpyBoy

  3. Joe Kaiser responds:
    Posted: July 26th, 2007 at 8:18 am

    Damn, I was sure I’d get that one by you. Good call, but you’re only halfway there.

    Penn and Teller are magicians.

    Joe

  4. Joe Kaiser responds:
    Posted: July 26th, 2007 at 8:33 am

    This is a report on a House Bill, SpyBoy.

    The law is RCW 84.64.080, and I’ll be addressing it tomorrow (and once again, I am not an attorney).

    Joe

  5. anemonehead responds:
    Posted: July 26th, 2007 at 11:46 am

    Nothing magical about what they did, just trying to keep the booty for themselves and they have the connections to do it. I’m a firm believer in it’s not what, but who you know and it’s definitely proven here.

    I’m sticking with P&T’s HBO show…BULLSHIT!

  6. Rick Harmon responds:
    Posted: July 26th, 2007 at 1:59 pm

    OK, now I’m pissed. To begin with, my limited understanding of technical real estate legal kinda things causes me some problems with this logic from above:

    “Only a person owning a recorded interest in land being foreclosed can pay the taxes due on the property, and thereby create a lien on the property. Only the record owner is entitled to receive the excess proceeds from the foreclosure sale after the proceeds are used to pay off delinquent taxes; assignments of interests executed or recorded after issuance of the certificate of tax delinquency must not infringe upon the record owner’s right to receive excess proceeds.”

    I’d like to see that ran by FHA/HUD, the VA, or IRS, as to interests of the United States governments. Stay with me, know, because I’m not going to rant or cry Ruby Hill or anything. But you gotta wonder what position your (YOUR!) state legislature believes the Fed would take in such circumstances.

    To carry that farther, as a lender (I am an old fashioned hard money guy at heart) are the WA state folks saying that I would not be entitled to my equitable share of surplus funds/excess proceeds should my voluntary lien (TD) be recorded prior to the sale? I think that ALL WA state lenders ought to think this one thru.

    If accurate, and a lender’s tax monitoring service fails to notice a default or the matter slip thru the cracks, your Bill would deny them anything towards their security interest. Es no bueno!

    I’m thinking that this problem could have farther reaching consequences than the Legislature ever considered. By the way, I don’t expect to be doing any business in WA any time soon, either.

  7. Joe Kaiser responds:
    Posted: July 26th, 2007 at 3:19 pm

    Don’t get ahead of me Rick . . .

    Joe

  8. Davido responds:
    Posted: August 5th, 2007 at 11:00 pm

    Joe, thanks for this bit of legislative history. I’ve been gone from this blog during all July. So have recently been catching up by reading and commenting from August back toward June. Seems to me that a challenge to this law, to the extent it can by argued to be missused or ambiguous, will hinge in part on the court’s interpretation of the legislature’s intent (as is shown by these and other writings). Anyhow, I’ve always been curious as to how and why the law came about. Thanks you for this blog which is bringing that “how and why” into ever sharper focus. Looks like I may have you and Fiscal Dynamics, or should I say Bob Dick and Robin Hunt, to thank. Did you notice that Robin Hunt, the treasurer from down here in Thurston County was listed as one of the two “prime sponsors”?

  9. roundhouse responds:
    Posted: August 13th, 2007 at 6:47 pm

    Im a little confused here.
    Joe,
    Let me start by saying I have one of your books and enjoy reading your posts on a another creative real estate forum.

    Wouldnt it accomplish the same thing if you simply advertised and sold the property?

    Or does the tax sale auction hysteria simply bring more money?

    And do you record the deed as you being the owner before the sale?

    I live in an area in north Georgia that has absolutely zero tax sales, some foreclosures, but the land is valuable enough at $30K+ per acre, that no owner lets it go to sale for a few hundred in back taxes.

    Georgia auctions off the tax lien, not the property.
    Whoever buys the lien gets the property 3 years later if the lien is not paid off by the owner, at 16% interest annually.

    If you buy the lien for face value, thats a pretty good deal. but usually it gets bid up far more than face value.

    BTW, do you have any idea how much $$ the county keeps every year in overages from owners the county cant locate?


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