Originally created 07/05/99

Investors drawn to auctions



Paula Guilbeau closed her eyes as the volley of bidding took place, the price climbing higher and higher.

Stop, please stop, she thought.

When the auctioneer had the last word, she and her husband Mark had purchased the land they wanted -- 2.8 acres beside their house on Mullikin Road -- for $24,500.

"I was praying the whole time," Ms. Guilbeau said.

The property was one of five to go on the auction block at the sheriff's sale in Columbia County June 1, an offering that is held nearly every month. The sale is the last means the county has to collect delinquent taxes.

The opening bid on the Guilbeau's property was $2,696.72, the amount owed in taxes by its owner, Willie Mitchell Jr. But the Guilbeaus are not the only ones who wanted the property. The sale is attended by real estate investors, those looking to turn a profit on cheap land.

"I just couldn't believe he bid against us," Ms. Guilbeau said of Surindejit Singh, who countered in the bidding for the property. "He probably doesn't even know where that land is. I can't believe he has that much money -- you have to have cash or a cashiers check. But we are very happy that we got it."

But that was child's play.

The bidding on a house at 3590 Pebble Beach in West Lake was intense. Tax Commissioner Kay Allen was recording each bid and when the bidding ended, she'd filled a page on a small legal tablet. The opening bid was for $3,427.81 and when the final bid was called, Mr. Singh had purchased the property for $214,000.

"I buy property for investment purposes, to get ahead of the game," said Mr. Singh, owner of the Wingate Inn in Columbia County. "Real estate is real estate."

These properties are advertised as a sheriffs sale in the legal section of the newspaper (The Columbia News Times is the legal organ of Columbia County) for four weeks before the auction. When every other method to collect taxes has failed, the county proceeds with the levy process, said Dwight Johnson, Columbia County delinquent tax officer. In every county in Georgia, property is sold on the courthouse steps the first Tuesday of the month (inside the lobby in Richmond County).

"Each month we start out with 150 to 200 for sale but because of our record, people know that we will sell them unless the taxes get paid, so most of them are paid before it ever gets that far," said Jerry Thompson, Richmond county levy officer. "They know we mean business."

In 1998, only 10 properties were sold in Richmond County and in 1999, only four properties have been sold. Last year, only one property was sold in Columbia County and this year six have been sold.

"Selling property is not our objective," Mr. Johnson said. "Our objective is to collect taxes on the property. It's a small niche in the community that, for whatever reason, is not paying their bills. Our county is very blessed in having a nearly 100 percent collection rate."

Those properties that go to auction are typically one to five years delinquent, he said. Several factors, including the amount of taxes owed, are considered before the property is levied against.

"I try to make every effort I can to contact these individuals," said Mr. Johnson, whose department typically sends out three delinquent tax notices before the levy process begins."We're not going after widows or anyone like that. We research the case before we even levy the case."

Before the levy begins there is a fiera facia or fi fa, a lien on the property which supersedes any other lien. The property owner, tenants and lending institutions are notified 20 days before advertising begins, and again 10 days before the sale.

If the property sells for an amount higher than the amount owed in taxes, the excess funds revert to the delinquent taxpayer.

After the auction, the process is not over. Property owners have a year and 45 days to redeem their property, but to do that they must pay the buyer the amount they bought the property for and 20 percent interest.

"Now we have to wait a whole year to see if anybody comes back," Ms. Guilbeau said after the auction. "Even if they do, it won't be bad because they will have to pay us 20 percent. But we don't want them to come back, we really want to keep the land."

Many people confuse the levy process with a foreclosure, Mr. Thompson said.

"There is a world of difference," he said. "At a foreclosure sale you get a deed that allows you immediate use of the property. Usually the banks sell for what they've got in them or what they can get out of them. In a tax sale, you have no use of the property for one year. The lean holders can take the property back by paying you the amount plus 20 percent. You don't get a good deed. You get a sheriff's deed. You can get title insurance, but it's like an act of congress. You're money's tied up for at least a year and 45 days, so you really need to know what you're getting into.

"But most people get involved in tax sales to make money. It's a long range investment -- a great way to make 20 percent on your money. But it's a buyer beware situation."

Anyone can buy property auctioned by the county for delinquent taxes, but some may be discouraged by the time and process involved, said Mr. Johnson.

"All the records we have available to us are available to the public as well," Mr. Johnson said. "There would be some title search that would have to be done if you would want to make a more informed decision, but not everyone has the time."

Courthouse Sale

Properties are advertised as Sheriff's Sale in the legal organ of the county four weeks before the sale, but few make it to auction.

Property is sold the first Tuesday of the month, but not every month. Sales are scheduled at the discretion of the tax office.

The buyer must pay for the property with cash or cashiers check within two hours of the sale.

Properties sold at auction can't be occupied or rent cannot be collected for one year and 45 days.

Legally, the buyer cannot set foot on, or make improvements to the property until they have foreclosed on the property after the waiting period.

The bidding begins at the amount owed in taxes. If the property is sold for more, the excess goes to the property owner.

To reclaim a property, the owner must pay the buyer the cost of the property at auction, plus 20 percent.

Melissa Hall can be reached at (706) 868-1222, Ext. 113 or melhall@augustachronicle.com.