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Are you delinquent with county property taxes? If so,
read on, but sit down and take your heart medicine. If
you’re not delinquent on your real estate taxes read
on anyway, as you may be able to save a friend or
relative hundreds of dollars in interest.
Though I had intended to research exact dates and
interest changes prior to writing this column I,
frankly, have been much too busy of late. The exact
dates should do little to change the thrust of the
column.
In the old days, delinquent property taxes carried
an interest rate of 6%. I’m getting old enough now
so that I can use “in the old days” a lot. As
market interest rates rose above 6%, people started
taking advantage of the county by PURPOSELY not paying
their taxes, i.e. cheap loan. Not wanting to be taken
advantage of, the county raised their penalty interest
to 10%, which solved the problem – for a while. In
the early 1980s there was a significant run up of
market interest rates and the county again needed to
raise the penalty interest rates to “keep up” with
the market. Delinquent tax interest was then jumped to
18%. That’s right, I said EIGHTEEN percent! If you
tried loaning money to somebody at 18%, you would be
civilly liable for usury unless you were, by statute,
an exempt lender. In fact, if you, as a private party,
had a pattern and practice of loaning money at 18% you
could face CRIMINAL prosecution unless the loan was
arranged by an exempt lender.
If I were sitting on the county’s side of the
desk I would counter by saying it’s not a loan, it’s
a penalty. I would further contend that it’s
customary for businesses to charge 1 ½% per month
(18% per annum) on delinquent bills. Well, don’t get
too teary-eyed worrying about the county, this
interest rate really effects people’s everyday lives
and in many cases forces the loss of their property.
This problem was greatly exacerbated when property values
dropped sharply in the early 1990s. People found themselves
out of work and owing property taxes based on values of
their home or investment property that was significantly
higher than the REAL value. I know of many, many cases in
the Lancaster/Palmdale area with land ownership where values
dropped 60% to 80%. People were unable to sell their
property or pay their taxes and the county started the 18%
snowball rolling. Yes, it was up to the owners to appeal the
change in value, but most property owners are no match for
the rigorous appeal process.
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Now lets bring this story up to date. This is no longer the
1970s or the 1980s. This is the 1990s. For the last several
years interest rates on conventional home loans have been at
or below rates charged 30 years ago. I know because I
purchased my first California house in 1973 and my present
house in 1975. If you have been following this tale of woe,
you might have expected the county to GREATLY REDUCE the 18%
penalty interest rate as market interest rates fell. No such
luck. During those years our county was faced with budget
shortfalls and a reduction in the 18% interest charge would
have meant less money for the general fund.
Several years ago I devoted another column to this
subject. County Supervisor Michael Antonovich happened to
read that article and he is aware of my concern. Too many
people have lost their homes because of this horrible 18%
snowball that rolls merrily down hill while homeowners and
property owners get deeper and deeper behind the eight ball.
I’m not naïve enough to believe that my occasional
article will awaken a ground swell of protest. I’m merely
devoting my topic this week to a serious burden placed on
many property owners. People behind in their taxes know they
are behind but have NO IDEA how quickly that snowball is
turning into an avalanche and, if left unchecked, will bury
them. Since I’m using this metaphor, let me further state
that if you were caught in a real avalanche the county
(Search and Rescue) would expend countless man-hours and
hundreds of thousands of dollars trying to rescue you. At
the very least, they would recover your body. Unfortunately,
in this case the county may be contributing to your early
demise or homelessness.
Peter Rosenthal
VIP Trust Deed Company |
