The mistaken sale of a house from Luzerne County’s tax-claim repository has prompted new protocol and a court action attempting to cancel the purchase, officials said this week.
The error, recently discovered by the Times Leader, allowed a corporation to buy a partially unfinished house on 1.38 acres near White Haven for $664 in November 2013. This property is assessed at $198,900 for real estate taxation purposes and situated atop a mountain in a private residential community featuring mostly new homes.
Both the deed and county records listed the purchase price at $500, but tax-claim representatives say that amount was a typo.
Properties must fail to sell at two public auctions before they enter the repository, where they can be purchased for hundreds of dollars. This property, which is located in the Autumn Mountain Woodlands development in Foster Township, was unsold in a first-stage auction but was never listed in a popular free-and-clear auction in which liens and back taxes are removed.
Representatives of Northeast Revenue Service LLC, the county’s tax-claim operator since 2010, said they’ve never had this problem before and blamed it on “human error.”
County Manager C. David Pedri told the council this week that Northeast Revenue recently filed a court petition seeking to reverse the sale to Mountain Terrace Properties Inc., a corporation set up by Grigorijs Vilcins.
Vilcins and his attorney could not be reached for comment.
All three taxing bodies — school, county and municipal — support the court action because they missed out on the potential to recoup more back taxes at a free-and-clear auction, officials said. Mountain Terrace also has been pushing for a reduced assessment because state assessment law says the sale price of a repository property “shall be deemed to be the fair market value of the property for tax assessment purposes.”
In its court filing, Northeast Revenue argued the repository sale was “invalid and legally void” because the property was not listed in a free-and-clear sale as required by the Real Estate Tax Sale Law.
Northeast Revenue said it would refund Mountain Terrace its $664 payment and a $100 processing fee, the filing said.
A refund of property taxes would not be necessary because Mountain Terrace has not paid real estate taxes on the property since its purchase, the filing said.
The company owes $10,100 in unpaid taxes for 2014 and 2015 because the owner failed to pay while its assessment challenge was pending. The property is eligible for tax auction again due to this debt, but the owner had obtained temporary reprieve due to the unresolved assessment issue.
A court hearing on Northeast Revenue’s request to reverse the sale has been scheduled in November.
The county administration worked with Northeast Revenue to develop new protocol to prevent future repository errors:
• The company will submit more documentation on proposed repository sales, including a map and photographs of the property and the dates of both auctions in which a property failed to sell.
• Another layer of approval will be added at Northeast Revenue before properties are placed in the repository pool.
• All three taxing districts must sign off on proposed sales.
Northeast Revenue always notified all three taxing bodies of proposed repository sales because they have the right to research and reject them, but some paid little attention to the notices.
Prior county manager Robert Lawton had approved repository sales at the time Mountain Terrace bought the property, which meant there was no public disclosure or discussion. The county council started publicly approving repository sales in 2015.
Northeast Revenue also has changed its security clearance to restrict some employees’ ability to change the coding of repository properties in its computer system.