Kentucky Housing Advocates: Inflated Fee Rackets Associated With Tax Lien Investing That Put Financial Squeeze On Homeowners May Now Be Easier To Pull Off
In Louisville, Kentucky, the Courier-Journal reports:
- A low-profile bill that sailed through the 2013 Kentucky General Assembly would make it easier for investors who buy property tax liens to charge homeowners up to $2,000 in legal fees, some Louisville advocates say.
Under state law, tax lien investors are entitled to recoup interest from homeowners when they settle delinquent property taxes on the homeowner’s behalf. (American Tax Funding, Tax Ease and Nebraska Alliance Realty are examples lien buyers who have operated in Louisville).
Lien buyers can also bill the homeowner for “reasonable” attorney’s fees incurred while preparing a foreclosure or protecting their interest in the property.
Between the interest, late fees and the attorney’s fees, an unpaid property tax bill can double or triple in a year or two, making it very expensive for homeowners to remove a tax lien from their property.
SB 27 appears to set “reasonable” attorney fees at $2,000. If tax lienholders want to charge more, they’d have to get approval from a court.
Anne Marie Regan, an attorney with the Kentucky Equal Justice Center, said the bill encourages lienholders to charge $2,000 in legal fees as a matter of course.
Cathy Hinko, executive director of the Metropolitan Housing Coalition, said $2,000 is too high “without support for the actual work done.”
The bill does say fees should be ”based upon documented work performed at a rate commensurate with hourly rates customarily charged by private attorneys in that jurisdiction for similar services.”
Sen. Tom Buford, the Nicholasville Republican who sponsored the bill, was not in his Frankfort office Thursday, and the line at his home was busy.
Gov. Steve Beshear is “reviewing” whether to sign the bill, spokeswoman Kerri Richardson said.
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