Kentucky

Whether or not it is legal, it is clearly not right.  If it is legal, then the state needs to control this practice of legal billing blackmail for purchasing late tax bills.  If the taxpayer can't pay the taxes, the tax bill purchasers get the foreclosure.  If the taxpayer comes up with the money, the tax bill purchasers get their questionable legal fees for the legal extortion.  It's a lose-lose for property owners, and a win-win for tax lien lurkers.

Not good.  Hey legislature!  After balancing the budget, why don't you balance the scales of justice and protect taxpayers/homeowners/voters/people from this predatory practice!!!  Now legislators,  that's a win-win.  If you can't get a draft bill together, then just call me.  I am sure I can gather a group of good lawyers to whip out some legislation in a few hours for FREE!!!!

Again, if anyone has a copy of the complaint filed (and then later the answer and any pleadings, please send to me in PDF and I will post).  Let's put the eyes of the commowealth on this uncommon method of accumulating wealth!

Here's the story From the Courier Journal:

Companies that buy delinquent property tax bills are charging unnecessary, exorbitant and illegal legal fees to owners who want to reclaim their property -- and preying on the elderly and unsophisticated, according to a lawsuit filed in Jefferson Circuit Court.

he suit, filed earlier this month on behalf of an 86-year-old woman and two other plaintiffs, says that charging attorneys' fees, often within a year after the sales, is both unlawful and unethical.

Under Kentucky law, private companies can buy delinquent bills and charge derelict owners 12 percent a year until they pay the debt. If the owners still don't pay after one year, the company can start foreclosure proceedings against the property and add interest and attorney fees.

But the law says that no action may be brought to initiate the foreclosure until one year after the property is certified delinquent.

The lawsuit alleges that the Jamos Fund I LP, of Fort Thomas, Ky., is violating that stipulation by tacking on exorbitant legal fees before the year expires, merely for sending notices to taxpayers that their bills have been purchased.

In an interview,  one of the lawyers for the plaintiffs, said other companies, including some owned by lawyers, are doing the same.

Cindy Lanham, a spokeswoman for the Kentucky Finance and Administration Cabinet, which is not involved in the suit, said it believes that attorneys' fees can be charged during that period, but Ballinger said he believes the courts will look askance at such fees if they aren't earned.

He said that the suit is the first of its kind filed in Kentucky and that the state's courts have never decided whether pre-litigation expenses can be charged during the year after a tax certificate is purchased.

Profitable business

Buying and selling tax bills is big business; in recent years in Jefferson County alone, the delinquent tax roll has averaged about $14million on about 15,000 delinquent bills. The interest on that amount in the first year is nearly $1.7million. 

Click on the linked header for the rest of the post.