Erroneous tax lien sales cost city thousands; official blames botched 2007 revaluation
By Jayed Rahman
Published: October 28, 2014
The city is being forced to refund $291,000 after erroneously selling tax lien certificates on several city properties. The city’s tax office inappropriately sold tax liens on properties located on River Street, 12th Avenue, and 22nd Avenue. Officials even sold lien on a property owned by the New Jersey School Development Authority (SDA).
During a hearing before the city council last Tuesday, tax assessor Richard Marra said the erroneous tax sales resulted from faulty records produced during the previous city-wide revaluation seven years ago.
Certain lots were put into the tax rolls which created erroneous lots, said Marra. “They then installed owners who were no longer on the books into those lots,” said Marra. One of those lots was 191-237 River Street owned by Jacob and Bonnie Goren.
During the revaluation process in 2007, the appraisers extracted and duplicated 211-237 out of the Goren’s property, installing a previous owner of the property as the property holder: Liszka Enterprise, a corporation. The corporation was sent tax bills for the duplicate property – the Gorens were paying their taxes yet due to the duplication an additional tax bill was being sent to the corporation.
The tax bill went unpaid since 2007, resulting in the tax office selling liens on the property. The city sold three different liens on the property — two to John Fressie, who filed papers in the New Jersey Superior Court to foreclose at which point there was a realization: that property did not exist.
When a tax bill goes out and no one responds the tax office sells a lien, said Marra. In this particular property the tax owner got “disgusted” and decided to foreclose on the property to find no such property existed. “It was an erroneous purchase that they made” said Marra.
Kenneth Morris, councilman at-large, asked whether the lien holder was paying annual taxes on the “phantom lots.” Marra responded the lien holder was.
Why didn’t anyone catch this? asked Morris. Marra said catching such thing is impossible unless the address which received the tax bill comes forward and stated to the tax office the bill was sent to the address as an error.
The duplicate property problem is easily corrected if the city reconciled or synchronized its property owners database through deeds – all digital – at the county clerk’s office.
“Why aren’t we reconciling those items with the register of deeds?” asked William McKoy, 3rd Ward councilman.
“I don’t know if there’s a cross reference like that,” answered Marra.
Morris said unless the city corrects its database of owners by verifying with the county’s property registry, the problem will remain. The new revaluation that is underway is likely to retain the error, for it is relying on the city’s database.
“We need to sort this out before we get another mess on our hand with the re-val,” added Julio Tavarez, 5th Ward councilman.
Morris raised the question why didn’t the city verify the information being inserted by the revaluation company.
“If that was verified back then, we probably wouldn’t be here today discussing it,” said Marra.
“It’s a breakdown in several departments,” added Morris.
Morris said the only way to correct this issue would be to audit all liens that have been sold and to verify to ensure the properties actually exist. However, before it can correct the problem it must pay for its error by returning money it procured through lien sales. The city also has to pay the lien holders their interest – on average 5-percent.
In total the city will have to refund $287,543 – interest included — on the River Street property to lien holders. The city also has to refund $3,732 to lien holders of 366-368 12th Avenue for erroneous lien sales.
The city also sold liens on 12 22nd Avenue, the property owned by the SDA, where the new School 16 is being constructed. Five different liens were sold on the property, according to city records. A refund amount for the liens was unavailable.