Avoyelles Police Jury ok's agreement with N.O. firm to sell ‘tax sale’ properties

A New Orleans-based property auction company is promising to do “the heavy lifting” to help the Avoyelles Police Jury sell off property it has acquired due to delinquent taxes.

Steve Morel, of the CivicSource property auction company, spoke to police jurors at their Feb. 14 meeting. Morel said the company currently provides property auction services for 36 Louisiana parish and municipal governments. After hearing the presentation, the jury unanimously authorized CivicSource to start the process of making Avoyelles its 37th local government client.

The company has about 40 customers in three other states.

Morel began his presentation by pointing out that the parish’s “adjudicated property” became the Police Jury’s responsibility because the original property owner failed to pay taxes and it was put up for sale at a Sheriff’s Tax Sale and was not sold.

“You are not the owner, but you are stuck with it,” Morel said.

The property can still be redeemed by its owner for five years after it is turned over to the parish, Morel said. At that time, the parish can sell the tract -- in most cases.

“If a property has been adjudicated to the parish, it is most likely blighted property and that is why it was not sold,” Morel said.

TITLE INSURANCE
The property’s drawbacks can be overcome if buyers can be assured they are getting a good deal for their money.

The main ingredient in that recipe is title insurance, which protects the buyer from unpleasant surprises such as long-lost heirs popping up to claim their inheritance.

CivicSource held the first adjudicated property sale with guaranteed title insurance for the City of New Orleans on July 1, 2015, which was a “game changer” in the selling of adjudicated properties.

CivicSource uses a computer software program developed after Hurricane Katrina “when 80 percent of New Orleans’ tax base was scattered across the country,” Morel said. It was successful in tracking down displaced property owners and collecting local taxes owed.

The company traces the title of a property, tracks down any potential heirs or heirs of heirs and obtains title insurance and all other paperwork necessary for the sale of the property.

The company does all this “heavy lifting” at no cost to the local government, Morel said. It recoups its cost, and makes some profit, by putting those costs up front as part of the minimum bid for the property. The initial bid on the property must include the pre-sale costs, all delinquent taxes and any liens on the property.

Morel said the average preparation costs for an adjudicated property is $5,000.

“There may be some properties where this is not an option because they are not worth the cost to prepare them for sale,” Morel noted. “But in the majority of cases, it is.”

Morel said the most important thing in the way his company approaches the property sale “is to know who is interested.”

In most cases, these properties do not sit idle on the Police Jury adjudicated property lists because nobody wants to buy them, but because nobody knows they are for sale.

‘PEOPLE WANT TO BUY'
“People want to buy property,” he said. “In many cases, they do not know how to buy these properties or do not know where these properties are.”

CivicSource puts the properties online and puts up a “For Sale” sign on each tract to be sold. There are monthly auctions online, Morel said.

To avoid spending a lot of time and money on a property that will not sell, Morel does not start the process until there is at least one potential bidder willing to put down a deposit. He said the average deposit with other government customers is about $850. If that customer does not win the auction, he gets his deposit back. If he chooses not to bid and the property is not sold after the title search, appraisal, title insurance, etc., has been done, he forfeits the deposit.

“That doesn’t happen very often,” Morel added.

He said the most important goal of selling adjudicated properties is “to return it to commerce so that next year you will be getting a check for sales taxes paid on that property.”

If a property is sold “for cost only,” the parish would still meet that goal. If the spirit of the auction results in a higher bid on a property, all excess over the costs goes to the Police Jury. CivicSource does not take a percentage of that “profit” as an auctioneer’s fee.

Juror Marsha Wiley, who was assigned the task of heading the jury’s efforts to sell the adjudicated properties, said the CivicSource proposal “is a win-win for us.”

Police Jury President Charles Jones agreed, saying he can see nothing in the agreement that would keep it from being a benefit to the parish.

Morel said CivicSource has a one-page agreement with its clients.

“What we do is very complicated, but we didn’t think the agreement should be,” he said. The agreement is technically for one year, but can be terminated at any time. The agreement gives Avoyelles Parish access to the CivicSource auction process and its services, but does not obligate the parish to use that system.

The company also offers tutorials to those interested in participating in auctions.

CivicSource is a leading auctioneer of tax-distressed real estate in tax sales and adjudicated property auctions and prides itself on ensuring legally valid sales.