Monday night, the Campbell County approved a budget resolution to spend $21,739 to refund delinquent taxes. Combined with the resolution passed last month to spend $5,089 to refund delinquent taxes, the county has spent $26,828 from the undesignated fund balance.
The delinquent tax refunds weren’t a part 2012-13 budget, and money has been appropriated from the undesignated fund balance in order to pay them, according to Campbell County Finance Director Jeff Marlow.
These refunds are from a delinquent tax sale the Campbell County Clerk and Master’s office held on May 21, 2011. At the sale, property was sold in order to collect delinquent taxes certain property owners owed from 2008 and 2009. The county, as required, placed the minimum bid for pieces of property that was equal to the delinquent taxes penalties, interests, fees and costs owed. Citizens who placed bids on pieces of property at this sale that were equal to or higher than the county’s bid paid the delinquent taxes for the properties, thus purchasing them.
However, before the time of the sale, three owners of properties sold in the tax sale had filed bankruptcy, according to documents from the Campbell County Chancery Court. Glenn Wright Homes, LLC filed Chapter 7 bankruptcy on March 2, 2009. Lissa Disney and Michael and Joy Abts also had filed bankruptcy, according to the documents from the chancery court. These were all out of state filings, Campbell County Delinquent Tax Attorney Joe Coker said.
It wasn’t until after the sale was complete that the county was notified the property owners had filed bankruptcy, Campbell County Delinquent Tax Attorney Joe Coker said.
However, when a bankruptcy is filed, federal law requires all known creditors be notified, Coker said. This is done using a creditor matrix, or list of creditors.
“That didn’t happen here,” Coker said.
The bankruptcy filings voided the transactions from the sale. A federal requirement places an automatic stay that prevents creditors from enforcing leins or collecting judgments unless the bankruptcy court releases it, Coker said
“We had no right to sell,” Archer said. “Bankruptcy laws say you can’t sell land if (the owners) are in bankruptcy. When you go bankrupt, you’re protected by bankruptcy court.”
Therefore, the county has spent the last two months refunding the taxes paid at the delinquent tax sale on May 21, 2011.
The budget resolution passed Monday appropriated $21,739 to refund delinquent taxes paid for on six pieces of property belonging to Glenn Wright Homes at the delinquent tax sale. Melvin Boshears paid $3,623.13 for each piece of property. The chancery court decided to refund him this money, without interest.
On Oct. 22, the county commission approved a budget amendment that spent $5,089 to refund delinquent taxes. These refunds will go to Danyeal Daniels and Paul Holt for money they spent in order to purchase property that belonged to Lissa Disney and Michael and Joy Abts. It will also refund Melvin Boshears who was acting as an agent to purchase property that belonged to Lissa Disney for Casey Boshears and Jerry Crutchfield.
Coker will get in touch with the bankruptcy court once the delinquent taxes are refunded. The property is now under the bankruptcy trustee, Coker said.
The bankruptcy court may sell the land at a bankruptcy sale, in which case Campbell County would receive payment.
“Property taxes, they come first,” Coker said. “You’re first in line on property taxes.”
If the bankruptcy court doesn’t intend to sell the property through a bankruptcy sale, the county could ask to have it released from bankruptcy so it could sell it at another delinquent tax sale.