Sheriff Sales have recently been in the news, and many Philadelphians want to know more about them. We asked Jim Zwolak, who handles Real Estate Tax legal matters for the City, to help explain.
What is a Sheriff Sale?
Jim Zwolak: When debts are owed to the City and the School District of Philadelphia, the City has the right to file a petition with a court to foreclose on the property associated with that debt. The City seeks permission to sell the property at an auction called a “Sheriff Sale”.
The purpose is to collect back Real Estate Taxes, but also other debt, such as unpaid water bills. The City takes properties to what we call a Tax Sale. Banks also foreclose on properties to collect mortgage debt. This is a second type of Sheriff Sale not associated with the City.
Why does the City have Sheriff Sales?
JZ: The City’s goal is never to foreclose. Real Estate Taxes fund City services and the School District of Philadelphia. A Sheriff Sale is the last recourse it has for collecting debt when other ways haven’t worked.
Before a Sheriff Sale, first we try to collect taxes through billing. We also provide owners with referrals for housing counseling and legal assistance. We urge them to apply for assistance programs and payment agreements. Sometimes, the next step is placing debt with a collection agency. Initiating a Sheriff Sale often gets owners to pay back taxes or enter an agreement before the auction occurs.
When is a property taken to Sheriff Sale?
JZ: Any property where the Real Estate Taxes, or water and sewer bills, or other charges that have been liened are eligible for a Tax Sale. But the process is long and the legal standards are rigorous. We have to notify all interested parties, both by certified mail and first-class mail. We also post a notice outside the property. If the owner doesn’t resolve debt by paying or entering an agreement, then we have a hearing, usually a few months after the petition is filed with the Court.
If someone appears at one of these hearings, if they come into court, we will never ask the court to issue an order to sell the property. We give people an application to enter into a payment agreement. Our goal is to get them under an agreement before the next hearing. Typically, we will not ask for the court order allowing us to sell the property unless we go to a hearing and no one has done anything—no one shows up.
It’s not legally required, but we send mailings addressed to both the owner and to the occupant. Once we get an order to sell the property, we have to send notice to all parties by first-class mail. We also prepare a handbill of Sheriff Sale, which is a notice saying in big, block letters “this property will be sold at Sheriff Sale”, and the Sheriff goes out and posts a new notice on the property. At this point, folks still have time to avoid Sheriff Sale. And again, we are not legally required to post that handbill, but we do it. We do everything we can to make sure people come in and pay in full, or get into a plan.
What do I do if I’m facing a Sheriff Sale?
JZ: You should immediately contact the Department of Revenue or the law firm that contacted you upon receiving any Tax Sale notice. The contact information will be in the letter you receive. The City works with two partner law firms to handle foreclosures, with cases about evenly distributed between the three.
Are owner-occupied homes treated differently than other types of property?
JZ: Yes. Homeowners, or anyone with an ownership interest in the place they live, can request an Owner-Occupied Payment Agreement (OOPA). They should email email@example.com or phone 215-686-6442. If the applicant is eligible, a monthly payment is set up based on their income. The vast, vast majority of cases that get to Sheriff Sale are not owner-occupied properties. Since 2014 around 6% of properties that went to Sheriff Sale were owner-occupied.
How can I avoid Sheriff Sale?
JZ: Keep your account current by paying your Real Estate Tax bills by March 31, or enter an agreement. Installment payment plans are based on incomes and the number of household members. There are also payment plans for delinquent taxes that can be as low as $25 a month for some low-income households.
Jim Zwolak is a Divisional Deputy City Solicitor with the City of Philadelphia Law Department, with more than 25 years of experience working for the City. He also plays viola and bass, shoots darts in the Olde English Dart League for Mac’s Tavern, and reviews restaurants for the Philadelphia Bar Reporter and on his website. You can follow him on Twitter @zucchinispread