Agenda - 09-20-2005-5e - Laserfiche WebLink

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2 Orange County has for many years run a successful in-rem foreclosure process. The in-rem method of foreclosure is a relatively inexpensive means of foreclosing the tax lien and selling the property. The legal theory underlying in-rem is that the land itself is being proceeded against, rather than the landowner, This type of foreclosure may be conducted by the Tax Collector's staff only, The deed presented to the successful bidder is known as a Sheriffs Deed and is anon-warranty deed. The process has been and is still very successful in bringing properties back to a tax paying status, Staff plan to continue to use in-rem procedures to the maximum extent they are appropriate, but with the continued growth in delinquencies, staff are finding it impossible to successfully work all "current year" delinquencies and back year real property delinquencies. As distinguished from the in-rem process, foreclosure of a tax lien by means of an action in the nature of a mortgage foreclosure is a civil action, That process requires the services of an attorney to file a civil action, and is the type of action for which staff propose the County retain Mr. Hogue's services. NCGS § 105-374(k) provides that property conveyed by mortgage style foreclosure is in "fee simple, free and clear of all interests, rights, claims and liens whatsoever": the deed is known as a Commissioners Deed, State law does allow for both In-Rem Foreclosure and Mortgage Foreclosure. Currently, Revenue staff have 785 real estate properties with delinquent taxes owed for 2004 that must either be cleared with same measure of collection remedy or foreclosure. Of these properties, staff expect to actually begin foreclosure on perhaps100 properties, In many cases, once the foreclosure process has been filed with the Clerk of Court, interested parties of these properties will then resolve the tax delinquencies and related costs, and the full foreclosure process is not ultimately carried out, The Revenue staff have an additional 302 properties with delinquent taxes from 2003 or earlier. The proposed agreement with Mr, Hogue is non-exclusive, meaning that the County may choose to use other firms or attorneys to perform the same kind of work, if it so chooses. Furthermore, the County is making no guarantee of a minimrum number of delinquent accounts to be assigned to Mr, Hogue. Revenue Department staff estimate that as many as 25 properties may be assigned in a year to Mr, Hogue (or other legal firms, should the County pursue additional similar contracts) for process, but this number will vary depending on the complexity of cases and the effectiveness of other forced collection measures short of foreclosure. FINANCIAL IMPACT: There is no direct cost to Orange County for the proposed services. The attorney will provide to Orange County non-exclusive services for collection and/or foreclosure of delinquent real estate taxes, All work will be undertaken promptly, professionally and courteously by the attorney, The attorney agrees by way of contract to accept as payment in full all court costs, publication fees, and reasonable attorney fees as awarded by way of the courts, RECOMMENDATION(S): The Manager recommends that the Board approve the accompanying contract with Attorney Cyrus Hogue, subject to final review by staff and the County Attorney, and authorize the Manager to sign it.