County considers new method for seizing tax-delinquent parcels

Faced with a stubborn backlog of tax delinquent properties, Marathon County is considering a new legal maneuver that would allow multiple parcels to be seized at once.

At its April 12 meeting, the Human Resources, Finance and Capital Committee recommended adoption of an ordinance that would enable the county to use a process called “in rem” foreclosure to take ownership of properties with unpaid property taxes. (The Latin phrase translates to action “against” the property.)

Corporation counsel Michael Puerner said the county currently uses what’s called a tax deed process to pursue taxdelinquent properties, but it only can only be used against one property at a time. The county currently has 370 properties eligible for seizure, but 100 new tax-delinquent parcels are likely to be added this year.

Property owners are afforded a total of three years from the time a tax bill is issued before the county can take action to acquire the property. Puerner said the process starts with the treasurer’s offi ce sending out a tax certificate on September 1 of the year when a payment is missed. From that point, Puerner said a “two-year clock” starts running, giving the property owner time to pay any back taxes and penalties before the county takes further action.

Puerner said state statute lays out several options for counties to utilize when acquiring tax-delinquent properties, and all of them require extensive notices to the property owner, the mortgage holder and any lien holders. The in rem foreclosure option has the advantage of addressing multiple cases simultaneously, instead of one at a time.

“So, if you have a list of 50 outstanding properties, you can file that list in court and handle all of them at the same time in the same court proceeding,” he said.

Unlike the tax deed process, the county will need to file affidavits with the clerk of courts and obtain a court order to proceed with an in rem foreclosure, but Puerner said this actually makes it harder for the property owner to claim they were not properly informed.

“From a legal perspective, I do see some benefit to having court involvement on the front end, to receive that court order approving that transfer,” he said.

Before a foreclosure is finalized, state law allows for an eight-week redemption period during which a property owner can pay off the taxes and retain ownership of the property. In cases where the county doesn’t know who the owner is, a guardian ad litem is normally appointed by the court and paid for by the county, Puerner said.

If a foreclosure is granted, Puerner said the process for selling off properties remains the same. As required by a new state law, the county must reimburse the original owner for any sales proceeds beyond what is required to pay off the back taxes.

Committee chairman John Robinson said there’s some urgency in clearing tax-delinquent properties off the books, because when property taxes are not paid, the county is still required to reimburse the school district, municipality and technical schools for the lost revenue. After 10 years, he said the county can no longer recoup the expenses owed.

“The longer we wait, the less likely we are to recover (the costs),” he said.

Puerner said the county board needs o adopt an ordinance authorizing the treasurer’s office to use the in rem foreclosure process, and once that authorization is given, it cannot be be repealed for at least a year. He also noted that the county is free to continue using the tax deed process or other methods of seizing properties, as long as the method isn’t changed midway through the process.

County treasurer Connie Beyersdorf said she believes the in rem foreclosure option will enable her office to work through a lot more delinquent properties. She noted that Fon du Lac County’s treasurer has been using the process for 30 years, and it has a checklist for staff to follow.

Beyersdorf also noted that her office got 96 people to pay off their back taxes last year, but new delinquent accounts are always being added to the list after the three-year waiting period elapses. She said homeowners often get warnings from their banks or insurance companies when they are behind on their taxes, which happened more often after the COVID- 19 pandemic.

“We’ve had a lot of people contacting us trying to find ways to pay their property taxes,” she said “They don’t want to lose their home.”

Board chairman Kurt Gibbs said he supports adding another tool for the treasurer’s office to use, but he questioned whether existing county staff have enough time to handle an increase in foreclosures. Tax-delinquent properties need to undergo an environmental inspection before they can be sold, so the process also requires extra work by the Health Department, he noted.

Beyersdorf said it takes a lot of staff time to write notification letters to property owners, and the letters have to be reviewed by corporation counsel to make sure the legal verbiage is correct. Otherwise, property owners can challenge the county’s actions, she said.

County administrator Lance Leonhard said it’s likely the treasurer’s office will have to “bring in some external resources” to help clear the county’s backlog of tax liens.

“We certainly can come back with a plan to identify how we can bring additional capacity to bear to address this issue,” he said.