Here Is an Ounce of Prevention
By Jeffrey S. Watson
The second half of 2021 real estate taxes will be due and owing either this week or the next for many of you. I want to share something I have noticed recently. I have had three similar cases come across my desk in the last five weeks, which means it’s something that deserves attention. Investors who own properties that are free and clear are sometimes not receiving their tax bills from the county because they are being sent to the wrong address. Two of those three recent cases are tax lien foreclosures filed in Cuyahoga County, Ohio because the landlord-owner was not getting the tax bills. They were being sent to the property, and the tenant was throwing them away.
It doesn’t take much imagination to figure out the results of tax bills being thrown away and not paid for a couple years, or to understand how that can happen, especially if you own multiple properties and pay your taxes in a lump payment. It’s easy to overlook one. In both of these cases, the landlords are successfully getting back their control of the properties and getting the back taxes paid. Sometimes, that isn’t an easy feat to accomplish.
Here is the ounce of prevention to avoid the pound of cure. Go to the website for the county auditor or tax assessor where your properties are located and double check the listed tax mailing address for each one. If there is a mortgage on a property, make sure the tax bill is being sent to the correct servicer. If the property is free and clear, make sure it is being sent to the correct address to make payment. If the property is held in a trust, make sure the tax bill is being mailed to the address for the trustee.
I recommend you put a reminder on your calendar every six months for you or a team member to go online and check the real estate tax status of each property just to make sure the county has accurately recorded your tax payments. We know that to err is human, but when you get computers and the government involved, you can screw things up in a hurry. Since I adopt the “belt and suspenders” philosophy of checking and double checking, these are the recommendations I am now following and am making to my clients based upon the trends I’m seeing of increased real estate taxes and bureaucratic county government apathy that has resulted from the COVID years. I know there are exceptions, and some individuals in county offices are diligent and hard working, but my experience has been that the last couple of years have allowed many government employees to “mail it in” and not be as diligent as they used to be. I’m not trying to step on toes, just being realistic.
In an upcoming post, I will talk about trustees and the importance they play when you use a grantor revocable title holding trust (a land trust) to hold title to your investment properties.
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Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. Read more of his viewpoints at WatsonInvested.com.