Unit 19 b lecture

Special Assessments

Special assessments are additional charges levied to homeowners to cover specific costs that benefit a defined group of properties. For example, if there is a sewer installation project in a subdivision costing $100,000, and it benefits 50 homes, each homeowner generally pays $2,000. These assessments can be classified as either voluntary or involuntary, depending on the circumstances leading to their implementation, such as local government mandates or community improvement projects.

Pro Rata Share

Pro rata refers to the distribution of expenses proportionally among stakeholders based on their share or benefit. For example, if 50 homes are sharing the total cost of a $100,000 project, each homeowner's pro rata share amounts to $2,000. This principle ensures that costs are allocated fairly, reflecting the amount each property stands to gain from the improvement or service.

Footage Calculations for Sidewalks

When infrastructure improvements such as sidewalks are constructed, the costs can be calculated based on the footage that benefits individual homeowners. For instance, consider a sidewalk costing $20,000 that serves 10 homes. If the total sidewalk length is 200 feet and each property is assessed based on their front footage:

  • Sue's front footage: 25 feet

  • Calculation Process:

    • Cost per foot = Total cost / Total footage

    • $20,000 / 200 feet = $100 per foot

    • Sue's share = Cost per foot x Sue’s front footage

    • $100 x 25 feet = $2,500 This method underscores the importance of a fair billing system, where homeowners only pay for the portion of the improvements that directly benefits them.

Tax Lien Enforcement

When property taxes remain unpaid, the local government holds the authority to recover the owed amounts through a tax sale. During this process, the property can be sold to recover unpaid taxes. A tax certificate is issued to the buyer of the tax sale, which allows them to later apply for a tax deed. Two types of redemption rights protect property owners:

  1. Equitable right of redemption: Allows property owners to reclaim property before the sale.

  2. Statutory right of redemption: Grants owners the ability to redeem the property after the tax sale under specific conditions, usually within a set time frame.

Rights of Property Owners and Buyers

It’s important for buyers at a tax sale to understand their responsibilities. They must pay the full tax balance plus accrued interest. Furthermore, buying property at a tax sale does not eliminate any existing liens on that property. Often, buyers will need to file a quiet title suit to remove these liens, which is a legal process where a judge affirms the buyer's ownership and takes measures to eliminate competing claims.

Tax Deeds and Property Transfer

If a property is sold during a tax sale, the original owner usually maintains possession of the property for a redemption period, which typically spans 12 months. Should the original owner fail to redeem the property within this timeframe, a tax deed is then issued to the buyer, granting them full rights to the property. It's crucial to recognize that even if existing liens are addressed, these may still attach to the original debtor, potentially complicating the property transfer process for new owners.