Report on bulk tax lien sales
In 2009, the City instituted a bulk tax lien sale to American Tax Funding Services (ATFS) as a way of dealing with delinquent taxes, much the same as Monroe County and New York City had done. Prior to that time, the City conducted annual mass foreclosures.
Last year, the City commissioned a study of this process and now has the results of the review by the Center for Community Progress. The final report describes both positive and negative impacts resulting from the sale of tax liens. Read the study.
What is a tax lien?
A tax lien is a legal claim against real property for unpaid property taxes, assessments, fees or other governmental charges, as well as interest due on these taxes and charges. A lien is created when annual taxes are levied. When the annual tax, including all items added thereto, local assessments and water rates upon real estate remains unpaid after the expiration of one year, the tax lien is delinquent and may be sold.
What is the tax lien sale notice?
The tax lien sale notice is written notification to the property owner that the City of Rochester intends to sell the tax lien to an authorized third party, who becomes the “lien holder”. The new tax lien holder then has the authority to collect the money that was previously owed to the City of Rochester, with the same interest that the City would be entitled to. The new tax lien holder does not own the property, just the tax lien.
What should you do if you receive a tax lien sale notice?
Should you receive a lien sale notice you will have twenty days from the date of the notice to contact the City of Rochester to remedy the delinquency. Upon expiration of the twenty day period the lien may be sold to an authorized third party. Should you have questions concerning the lien sale notice please contact the City Treasurers office at (585) 428-6100.
Can I apply for a tax agreement with the city of Rochester to avoid the lien sale?
Any eligible owner of a parcel on the tax lien sale list may apply to the Director of Finance to enter into a delinquency agreement with respect to that parcel. Any owner who makes timely application, and who is found to be eligible by the Director of Finance, shall be permitted to enter into a delinquency agreement with the Director of Finance. The delinquency agreement must be executed at least twenty (20) days prior to the date on which a sale of delinquent tax liens shall be effective. Should you wish to apply for a delinquency agreement please call the City Treasurers office at (585) 428-6100.
Can the tax lien on my property be sold if I am disputing the tax or charge?
Yes. All eligible tax liens, including those under dispute, may be sold.
What tax liens are eligible for sale?
Only taxes that are delinquent – more than one year old – may be sold. Delinquent City and School taxes, assessments and charges may not be sold if they are:
(1) The subject of an agreement for the installment payment of delinquent taxes (commonly referred to as a tax payment agreement), which agreement has been entered into and that is in full force and effect
(2) Currently restricted in their enforcement by the provision of any bankruptcy law
(3) Related to any real property owned or controlled by the federal, state, or City government, or any agency, department, or board thereof, against which enforcement of the tax lien is restricted or prohibited under applicable federal, state, or local law
(4) Related to real property that is the subject of a pending tax certiorari proceeding for the tax year(s) involved
(5) Related to real property that has been identified by a local, state or federal government as having environmental contamination.
Who will my tax lien be sold to?
Eligible delinquent tax liens will be sold to American Tax Funding Servicing, LLC (ATFS). The City of Rochester does not offer delinquent tax liens for sale to individual investors or to the general public.
What happens after a tax lien is sold?
Within 30 days of the tax lien sale date, the purchaser of the delinquent tax liens will notify all property owners by mail of (a) lien year(s) sold, (b) the name of the new tax lien holder, and (c) the name of the tax lien holder’s authorized representative whom the property owner should contact.
Once a tax lien is sold, the property owner then owes the taxes, charges, and accrued interest to the new tax lien holder, not to the City of Rochester.
Will the new lienholder accept partial payments or change the interest rate for late payments?
The holder of a delinquent tax lien may, at the holder’s discretion, accept partial payments and enter into installment agreements with the owner(s) on such terms and conditions as the holder of the delinquent tax liens shall deem advisable, without regard to any restrictions that might be applicable if the tax lien were held by the City, provided that the rate of interest for tax liens purchased or held by a private entity shall not exceed the rate of interest for tax liens held by the City.
Can I request an exemption from the lien sale if I am serving in the military?
The City’s policy is not to sell delinquent tax liens where the owner is exempt from tax foreclosure under Section 314 of the Military Law.
Can I pay my current tax bill to the city of Rochester after my delinquent lien is sold?
Yes. All payments received after the delinquent lien is sold will be applied to the current tax bill.
Can the new tax lien holder sell my property?
Not until after the tax lien is foreclosed. The tax lien holder can foreclose the tax lien acquired only by foreclosure in accordance with the provisions of Article IX, Part E, Title 3 of the Charter of the City of Rochester.
Can the new tax lien holder assign my lien?
Yes. The Charter allows the new tax lien holder to further assign the tax lien. The City does not expect American Tax Funding to further assign tax liens in practice.