Indiana lawmaker's proposal would change tax sale process for derelict homes

The legislation would end the one-year redemption period a buyer must wait before taking ownership of an abandoned house purchased at a tax sale.

State Rep. Justin Moed, D-Indianapolis, said the bill specifically targets properties local governments have designated as abandoned, and then sold at tax sale. Under the legislation, buyers would take ownership at the time of the tax sale purchase, meaning they could start rehabilitation work immediately, Moed said Friday in a released statement.

The bill would leave in place the redemption period for those owners who are working to pay delinquent taxes to keep their homes, Moed said.

Moed said current law allows cities to create a certified list of houses they believe are abandoned and provide that information to the county.

Requiring a redemption period for abandoned homes creates a disincentive for potential buyers because of the risk the home may be vandalized or copper wire stolen during the waiting period, Moed said.

“They’re watching their potential future home depreciate right in front of them, and they can’t do a whole lot about it,” Moed said.

State Rep. Gail Riecken, D-Evansville, said an abandoned house can become a nuisance for a neighborhood as it waits through the one-year redemption period, and it’s hard to know who is responsible for maintaining the property during that time.

Riecken said she’s in favor of ending the redemption period for abandoned homes and making the tax sale the final sale on those properties.

“Right now it certainly sounds like an aggressive position to solve a problem that’s becoming a real burden to our communities,” Riecken said.

Along with ending the redemption period on abandoned homes, Moed also is proposing to cut in half the interest payments so-called investors receive if they purchase properties at tax sale, and then the property is retained by the original owner.

An ongoing two-year investigation by the Courier & Press, “Who Owns That?”, showed how vacant properties often deteriorate while caught up in the tax sale process.

Currently after a tax sale occurs, delinquent property taxpayers, in addition to taxes and fees, may also be required to pay interest based on any surplus or overbid of their property made at the sale, Vanderburgh County Auditor Joe Gries said. That interest — up to 10 percent per annum — is then passed along to whoever purchased the property at the tax sale, Gries said.

“It’s been my experience that the people bidding on properties on tax sale are doing it as an investment, for trying to invest their money to receive interest on their money,” Gries said.

Evansville city officials are planning to follow the legislation, said Ben Miller director of the Evansville-Vanderburgh County Building Commission.

Miller said he didn’t know if the legislation would be a huge benefit to the city, considering most abandoned properties aren’t sold at the initial tax sale and proceed to a county commissioners’ sale where buyers immediately receive title to the property.

“We will certainly keep an eye on the bill,” Miller said.

Courier & Press reporter Thomas B. Langhorne contributed to this article.