City Council ok’s sale of property tax liens to collection agencies

City Council Philadelphia
Credit: File photo / Rikard Larma

City Council on Thursday voted 15-2 to pass a bill allowing the city to sell property tax liens to private collection agencies.

“This is an easy way for Philadelphia to save a lot of money,” said Greater Philadelphia Association of Realtors president Allan Domb.

He noted Philadelphia has about $1.6 billion worth of uncollected delinquent tax revenue spread out over 16 different taxes, an estimated $500 million of which is comprised of delinquent real estate taxes.

Domb further pointed out in the 28 other states where similar legislation has been passed, less than 1 percent of all tax lien sales end up in foreclosure, whereas about 50 percent are purchased by mortgage companies seeking to protect their investments.

“We think [the bill] is great for the city and a great way to collect money at a time when we really need it,” Domb said.

Bill sponsor Councilman Bill Green pointed to a Pew Research study released this summer estimating the city could raise $150 million by enacting the measure.

As about 55 percent of Philadelphia’s property taxes go to fund the city’s ailing schools, he said the revenue is sorely needed.

City Council last week added amendments to the bill preventing the acquirer of a lien in a lien sale from foreclosing on the property for two years.

“This is significant because under the current law, the city is required to foreclose within one year if people have not entered a payment agreement, so this gives, at only a 5 percent penalty rate, homeowners the opportunity to have two years to pay off their lien holder and should be of benefit to them,” Green said.

The amendments also prevent the sale of any lien less than $1,000 and cap legal fees at $200 an hour.

Green said property owners seeking to prevent their house from going into foreclosure can expect to pay anywhere from $8,000 to $10,000 in legal fees, so the amendment would provide further consumer protections.

The bill now goes to the desk of Mayor Michael Nutter for further consideration.



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