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Social networking is great, but to me its true value is to make it easier for people to come together in-person and get things done. A great example of this comes on Sunday at “Mill City Skill Share” during which a number of individuals have volunteered to share a skill with others at no charge. Here’s some information from the Skill Share website:

Want to learn a new skill? Meet your neighbors?
Engage in a creative activity?

On Sunday May 6th, 2012, the first ever Mill City Skill Share will be held in historic Downtown Lowell, MA. Our goal is to share wisdom and knowledge through collaborative learning and connect members of our community in a way like never before! This promises to be a fun free event for all ages that shouldn’t be missed!

Over two dozen awesome workshops will be held from 10-6 at various locations throughout Downtown Lowell.

Registration and refreshments from 9:30-10:30 am at
The Mogan Cultural Center
40 French Street
Lowell, MA

Free for all ages!
Donations of non-perishable food items and gently used clothing are encouraged.

Visit our Workshops Page for workshop details, schedule, locations and map.
If you are interested in volunteering, sponsoring, donating food or services, or would simply like more information, contact us at millcityskillshare@gmail.com

The city of Lowell held its first in a very long time tax lien auction yesterday in the City Council chamber of Lowell City Hall. City Treasurer Elizabeth Craveiro (shown above) ran the auction which was attended by about 30 people. Ten seats in the front row of the spectator’s section had “reserved” signs taped to them. They were for the bidders who had pre-qualified. As each of the potential bidders arrived, he or she received a manila envelope containing among other things a sheet of heavy-weight yellow paper with a large number imprinted on it. This is how bids would be recognized and identified.

The auction opened shortly after 10 am. The Treasurer first explained that the auction would open with the sale of a single bundle containing all properties remaining (some had been pulled back either because the back taxes were suddenly paid in whole or part with a payment plan, or some had environmental or legal problems). The minimum bid for the entire bundle would be $6,099,997. The bidding opened but no bids were made. The Treasurer immediately announced “Hearing no bids, the auction for the entire bundle is closed.” Three sub-bundles were then offered for sale, one at a time. The minimum bids were $1,826,855 for the first; $1,813,424 for the second; and $2,459,717 for the third. No bids were made for any of these packages and each auction was immediately closed. The Treasurer then announced “That concludes our tax lien sale; thank you for attending.” And in much less time than it took me to type this paragraph, the entire proceedings had ended.

So what happened? I believe that none of the ten qualified bidders had any intent on bidding for one or all of the bundles, especially with the minimum bids that were required. Presumably they were there in the event that the bundles would be further broken down into individual properties but that was not the case. As I wrote on Wednesday, the sale of tax liens by municipalities in Massachusetts is a relatively rare event. The reason for that isn’t so much its soundness as a business or financial practice, but because obtaining clear title through a tax sale is a process fraught with legal uncertainty. Although I’m not privy to the city’s rationale in bundling a bunch of properties together, I assume it was to prevent bidders from cherry picking the best of the lot and leaving the city with all the problem cases. By packaging properties together, the buyers, to get the good properties, would also have to take a few of the difficult ones. Whatever the case, it’s my understanding that the city did collect in excess of $500,000 in back taxes as property owners scrambled to get current or at least enter into payment plans. So from that strategic perspective, it was a good move. Undoubtedly there will be more discussion of this at some future city council meeting.

Outside of New England, property tax collection is primarily the domain of county government and so at the registry of deeds we frequently get calls from out-of-staters asking for the date of our next tax lien sale. Aside from a way of raising cash from government, dabbling in tax liens seems to be big business in much of the rest of the country. To such callers we explain two things: (1) property taxes in Massachusetts are handled at the city and town level so call the local tax collector; and (2) the law of property tax liens in Massachusetts and the legal/procedural culture that has grown up around it prefers to allow the lien to remain on the property until some change in circumstances causes it to be paid off.

Tomorrow the city of Lowell will depart from this past practice and hold an auction of tax liens on city property. The sale will take place at 10 am in the city council chambers at Lowell City Hall. Details of the sale are available on the webpage of the city’s Tax Title Division, a site that also includes a complete list of the 350 properties to be sold. According to the city’s procedural explanation, all 350 (or however many remain once some are pulled back from the sale for whatever reason) are to be offered for sale as a single group. If there are no bidders for that or if an insufficient amount is bid, then three separate multi-parcel bundles will be offered for sale. It’s pretty clear that individual properties will not be auction separately.

Because this is such a rare occurrence, here’s my understanding of the legal principles involved. The city has an automatic lien on all real estate for unpaid property taxes. That’s why any time you buy or refinance, the lender requires you to obtain from the city and record at the registry of deeds a “municipal lien certificate” which certifies the amount of any outstanding taxes. (This document is deceptively named because it typically shows no taxes due but years later homeowners become panicky when they see a document with the word “lien” in its title associated with them in the registry of deeds database).

When a property owner falls behind in payment of taxes, the city may “perfect” its lien by recording a document called a “tax taking” which says the property was taken for non-payment of taxes in a particular amount. Even though the word “taking” is liberally used in this document, it really only serves as a tangible lien in the property records (as opposed to the “automatic” one that initially occurs upon non-payment but which is not represented by any particular document placed on record). The reason the “taking” does not literally take the property for the city is that our law is strongly slanted towards (1) getting the taxes paid and (2) allowing the original owner to keep on owning the property. If you recall that much of our property law emerged from medieval England, the idea of the government seizing someone’s private property was repugnant and so many procedural safeguards to prevent abuse were put in place and remain.

Even after one of these “takings” has occurred, the owner of the property (or someone acting in his stead) has the absolute right to “redeem” the property by paying all back taxes and fees. Unless the city files a petition in land court to foreclose this right of redemption – a costly and time-consuming process – no change in ownership of the property will occur. With the statutory rate of interest on unpaid taxes set at 16%, leaving a “tax taking” lien untouched on a property is in some ways the best investment the city can make on its money. By just patiently waiting until the property is sold, renovated, or refinanced – any of which would require the moving party to pay the city in full – the city receives a return of 16% plus expenses.

By selling these tax liens, the city of Lowell will simply be assigning its rights to proceed in the above manner to some third party. I assume the bidders will be fairly large companies that are already in the tax lien business. I’m unsure of their business models but can assume several scenarios: paying a few cents on the dollar now for the right to receive a 16% return later or perhaps aggressively pursuing foreclosure of liens in Land Court (although if any entity follows a timetable of its own setting, it’s Land Court) and then flipping the properties to third party buyers. Whatever the ultimate plans of the bidders, tomorrow’s auction should certainly be an interesting event.