The state land commissioner's largest delinquent tax sale of the season garnered more than $2 million after bidders purchased 217 of the 431 plots of land, homes and businesses on the auction block Tuesday at Verizon Arena.
The properties, located in Pulaski County, were put up for sale in hopes of recovering more than $1 million in past-due county real estate taxes that had been on the books for about five years.
While the largest in the state, Tuesday's event was the fifth of the auction season that begins each April and continues through mid-September. The locations for each county's sale vary from community centers to hotel meeting rooms.
Tuesday, two large meeting rooms at the North Little Rock arena were combined and packed with row after row of more than 250 dark red metal chairs. Those not lucky enough to find an empty chair stood along the walls.
Lisa Pelton, director of real estate for the land commissioner's office, said that while hundreds were in attendance, only about 130 were actual bidders.
Experienced investors arrived with laptops, additional staff members and spreadsheets of research. Others, many who said it was their first time, arrived alone or in pairs. One woman said she was hoping to hit gold by purchasing a property on the cheap and flipping it into a valuable investment. Revealing her name would give other investors a competitive advantage, she said.
The lowest amount of delinquent property taxes at the Pulaski County sale was $186.36 overdue for a nearly half-acre spot in a Jacksonville subdivision with a market value of $1,900. The property did not sell at Tuesday's auction.
The highest amount overdue was $25,553.31 for a 3,923-square-foot, three-bath, two-story Maumelle home with a market value of $325,850. The homeowner paid the delinquent taxes at the last minute, saving the property from auction.
Once a parcel number and delinquent tax amount were announced by the auctioneer, bidders raised their number cards high in the air and loudly called out bids. While some properties were met with silence, others elicited bidding wars that had the auctioneer pointing from the front of the room to the back, from the left to the right and back again.
Parcel No. 424 -- a 1940s bungalow on East Ninth Street in Little Rock with a market value of $86,450 -- set off a bidding frenzy that began with the delinquent tax amount of $1,145 and ended more than a dozen bids later at $16,000.
Many -- like a quarter-acre of vacant land in North Little Rock valued at $2,400 that sold Tuesday for $647 -- were purchased by a lone bidder for the tax amount.
At the sales table in the back, Lawrence Barbee peeled off $100 bills from a roll he pulled from his pocket to pay the $750 he owed for a different quarter-acre North Little Rock lot valued at $2,800 that he had just won in a small bidding war. It was his first auction purchase.
"Oh, man. I'd do it again in a heartbeat," he said, breaking into a wide grin. "I beat someone out. I screamed, 'Yes!'"
He's going to follow in the footsteps of his sister Lateisha Barbee-Nelson by building a small home on the lot and begin his career as a landlord.
The pair had scouted out a few properties in the catalog before the sale to determine if they would fit Barbee's plans.
Barbee-Nelson had attended several delinquent-tax auctions in the past and owns numerous rental properties. She's 41 and says the investments will mean she can retire from her North Little Rock city job at 45.
"It's been great for me," she said.
Her brother grinned and added, "I'm 36, and I'm shooting for early retirement."
An elderly gentleman, who didn't want to give his name, paid $342.82 in delinquent taxes for a half-acre in Jacksonville adjacent to a parcel he purchased the previous year at auction.
He plans to combine the acreage and give it to his daughter, who wants to build a house on it.
In his first year in office in 2010, state Land Commissioner John Thurston said he attended every single auction around the state. It was exciting, he said, to see the enthusiasm and the dreams the purchasers shared.
Anybody -- with only a driver's license and a free registration card -- can bid on the properties, Thurston said.
"It's a great opportunity for investments in real estate or for someone who has always wanted to own a home, but wasn't able to afford one," Thurston said. "It's not a gold mine, but gold is there if you do the research and the work."
The delinquent tax auction is the last resort for counties to recover lost property-tax revenue. Once the county exhausts its collection efforts -- usually two years -- the state land commissioner takes over.
The commissioner's 38 employees do everything in their power to allow the property owners to redeem their parcels by paying the past-due taxes.
"We have a 90 percent redemption rate," Thurston said.
The parcels sold Tuesday covered taxes due for 2013.
"This year's parcels at auction were sent to us in 2016, and we had them for two years before putting them up for auction," said Nikki Heck, land commissioner spokesman. "They're about five years delinquent when they go to sale."
Even with all the efforts before a sale to encourage them to make good on their taxes, property owners often rush to pay at the last minute. During Tuesday's sale, the land commissioner's staff constantly updated two white dry-erase boards at the front with canceled auction parcels as the original owners paid the delinquency.
The auction catalog originally listed nearly 700 parcels for Tuesday's Pulaski County sale, but it was whittled to just more than 400 available by the time bidding was finished.
Auctioneer Brent Hooten said that while delinquent property owners are not allowed to bid on their own properties, he has seen them show up at the event. On one occasion, a gentleman stood up after the home he was still living in was sold and said, 'I guess y'all can just come knock on my door.'"
"He just walked out," Hooten said. "It's really best for the new owners, if someone is living in the property, to take the deed and the sheriff to the property."
Even after the property sells at auction, the owner has 10 days to reclaim it by paying the delinquent taxes and other fees. There is also a 90-day litigation period in which the original owner can challenge the sale in court. Those cases are defended by the land commissioner's attorneys and, in some cases, the attorney general's office. There is no cost to the winning bidder.
If the sale is redeemed by the owner or overturned in court, the bidder receives a full refund.
"Only about 3 percent of the sales are contested in court," Thurston said. "We do a pretty good job of notifying all the parties involved."
The office also makes every attempt to notify interested parties such as those holding any liens, mortgages, judgments or other encumbrances against the property. If the party fails to redeem the property by paying the property taxes before the sale date, that interest is null and void.
There are exceptions, however, such as city and internal revenue office liens, improvement district taxes and property owners' association fees that transfer with the property and become the responsibility of the new owner.
The funds from the auctions go back to the counties to pay the delinquent taxes, but any extra amount earned by competitive bidding goes into an excess proceeds fund held by the land commissioner. The original owner has a year to collect the overage. After four years, the land commissioner gives the overage to the county where the property was located.
About 80 percent to 90 percent of the money goes to fund public schools, while the rest is for emergency services and roads, Thurston said. The fund now has $4.7 million.
Those parcels that did not sell during Tuesday's event will be placed on the land commissioner's post auction sales list within 30 days. Buyers can purchase the property on a first-come, first-served basis for the amount of the delinquent sales tax. If two or more offers come on the same day, the highest bidder takes the prize.
All bets are off if the parcel has been on the rolls for two or more years. No matter the delinquent taxes due, the land commissioner considers "all reasonable offers." Once a buyer submits a bid, however, the land commissioner can counteroffer until the sale price is agreed upon by both parties.
Thurston, who is serving his last term in office and is a candidate for secretary of state, has seen the auction continually grow in attendance and earnings. He credits the transformation from a printed catalog to a fully computerized system.
Previously, only the legal description and the parcel number were provided. The website now provides an interactive catalog where users can click on a parcel number and pull up myriad information, including the physical address, previous owners, acreage, home dimensions and a digital map.
Eventually, auctions may be held online as well, Thurston said.
"It's been great. We've been brought into the 21st century," he said. "Property is much easier to purchase now."
A couple pays Amanda Sanson (left) of the state land commissioner’s office after their winning bid on property during the agency’s delinquent tax sale Tuesday at Verizon Arena in North Little Rock.
State Land Commissioner John Thurston (top left) attends Tuesday’s auction, which involved properties that have been delinquent for five years.
A Section on 04/11/2018
Print Headline: On tax-forfeited land, it's going, going, gone; State agency takes in $2M at auction