LINCOLN — Several Nebraska state senators say they aim to strengthen advance warnings for people at risk of losing their homes, farms and businesses over delinquent property taxes.
The lawmakers said they were troubled by a story in The World-Herald last week that showed how investors buying treasurer’s tax deeds have been able to take properties from elderly Nebraskans without proof that the owners received advance notification.
The story also explained how lawmakers passed stronger notification requirements in 2012, only to later put those measures on hold.
“We need to make sure the person who owns the property has notice that they could lose the property,” said Sen. Matt Williams of Gothenberg. He said he plans to introduce a bill to fix the problem during the legislative session that begins Jan. 9.
The issue involves the complex system in which county treasurer’s offices sell tax liens against land parcels delinquent on property taxes. Investors who buy the liens can acquire the properties after a three-year waiting period and by sending a notice in a certified letter and publishing the notice in a newspaper in the county where the property is located.
The law, however, has no requirement to ensure that property owners actually understand they are in jeopardy of losing their properties. The World-Herald showed how the law allowed at least one investor to take properties from people who said they never received the notices and didn’t realize they were behind on taxes until it was too late.
The newspaper also explained how lawmakers strengthened notification requirements in 2012 by requiring notices to be served in an envelope stating in large print “UNLESS YOU ACT YOU WILL LOSE THIS PROPERTY.” But they put the enhanced notice measures on hold in 2014 and again in 2017 by passing amendments slipped into bills with little discussion or debate.
During those same years, Lincoln attorney Randy James, through his company Vandelay Investments, spent $75,000 to lobby the Legislature. James then continued to use the lax notification regulations in obtaining homes and farms for pennies on the dollar.
Earlier this year, the Nebraska Supreme Court ruled that James complied with the law in acquiring a $1.1 million farm near North Platte for about $50,000 in taxes and interest. The court upheld the transaction, even though the doctor who treated the 94-year-old woman who owned the farm testified she suffered from mental decline after a series of mini-strokes.
“It needs to stop,” said Sen. Mike Groene of North Platte.
The senator said he received calls last week from constituents upset about the issue. One wanted to know why senators approved amendments that made it easier for properties to be acquired through tax deeds.
Groene said it can be a challenge for senators to understand all potential ramifications of every amendment to every bill, especially in omnibus legislation. He said he plans to support stronger notification requirements and wants to see an emergency clause attached to the bill so it takes effect as soon as the governor signs it.
James, the owner of Vandelay Investments, has not responded to messages left by the newspaper.
Meanwhile, a $60,000 home near Ravenna that Vandelay acquired for $500 in back taxes plus interest is in the district of Sen. Williams. The home is owned by a 73-year-old disabled military veteran who said he didn’t receive notice from either James or the county until it was too late.
The Gothenburg senator said he believes there is still a need for treasurer’s tax deeds to help counties collect delinquent taxes. He also said he’s concerned that simply repealing tax deeds could further swamp overburdened courts with foreclosure cases.
But, Williams said, he wants to come up with a solution to make sure owners know they need to pay their delinquent taxes and interest or lose their properties.
Douglas County leads the state with about 3,500 tax lien sales every year. Dennis Rookstool, property tax manager at the Douglas County Treasurer’s Office, said some owners simply ignore the notices, and some walk away. But he has seen cases where others fall through the cracks and lose their homes.
It’s in no one’s interest to kick people out on the streets, especially when they have the money to pay their taxes, Rookstool said. But he’s not convinced warning envelopes alone will solve the problem. Rather, he argued for some degree of judicial oversight.
“I think you could put flashing lights and a siren on the envelope, and some people would ignore it,” he said. “And there’s so much mail fraud these days, what are people supposed to believe? That’s a reason to move it into a judicial setting.”
Sen. Curt Friesen of Henderson said his father nearly lost a small parcel of farm ground because he didn’t receive tax notices from the county for years. Luckily his father saw the notice published in a local paper in time to act.
“I feel bad when an elderly person gets taken advantage of,” he said. “That’s just not right.”
Sen. Burke Harr of Omaha, who introduced the amendments that suspended the enhanced notification requirements, said he was trying to enable a compromise reached by tax deed investors and county officials.
“I wish I had handled it differently,” said Harr, who is leaving the Legislature because of term limits. “But I’m confident my brothers and sisters in the Legislature will handle it appropriately.”
Robin Wisner of Ames, Iowa, who was on the losing end of the court decision in the $1 million farm case, said last week that he’s encouraged to hear that lawmakers plan to act. He hopes others don’t have to go through what he and his family did.
“I was wondering how people sleep at night when they let things like this happen,” he said. “That’s unconscionable.”
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