November 29, 2019

Scammers Hijack Tax Lien Investors’ Reputations to Rip Off Property Owners

A long-time practice for ethical tax-lien investors is being mimicked to rip off property owners.

In Colorado, scammers are imitating tax-lien investors and successful ripping off homeowners. If this scam spreads to areas of the country where you invest in tax liens or tax deed certificates, your reputation could suffer irreparable damage and you might even find yourself dealing with The Law.

The County Treasurer’s Office in Larimer County, Colorado, recently reported a spate of property owners receiving letters falsely claiming that a tax lien had been placed on their property. Those letters came from “The Tax Processing Unit in Larimer County, Public Judgement of Records.” That entity does not exist, said county treasurer Irene Josey.

In the letter, the homeowner is informed that their property has a tax lien that could result in wage garnishment or seizure of the home. The reader is encouraged to call an 800-number to prevent these actions. Reported balances have been higher than $10,500, and homeowners who call the number are given instructions on how to pay the “Tax Processing Unit” of Larimer County in order to clear the debt. The letters are signed, illegibly, by an “assigned resolution agent”.

The problem for tax lien and tax deed investors is that many investors send similar (albeit far less threatening) letters to homeowners when they acquire a tax lien or tax deed certificate at a tax sale. Essentially, the investor wants to let the homeowner know that their property has entered the tax sale process for their local county so that they can either pay off the debt or work with the investor to vacate the property as painlessly as possible. Some investors actually contact the homeowner in ways that local governments do not endorse, not realizing that they are violating local regulations. When investors attempt strong-arm tactics with homeowners, those letters can actually appear somewhat similar to this particular scam.

The problem, of course, is that people tend to lump all letters regarding tax liens on property into one category. That category, not surprisingly, is generally viewed in a pretty negative light. When a scam like this surfaces, it just adds to the general perception that tax lien and tax deed investing is somehow less-than-reputable even though it is a process established and regulated by local governments to help resolve tax debts! Both homeowners and some uninformed government officials may react to your completely above-board notification letter as if it were one of these scams. You must be prepared both by knowing the local rules and regulations for contacting homeowners and by refusing to be cowed if you have behaved correctly and legally.

At PIP Group, many of our investors opt to simply have us handle most of the “finer points” of tax lien and tax deed acquisition for them specifically so they do not have to deal with unpleasant issues like this one. We work in states and counties where local regulations are relatively investor-friendly specifically to optimize our chances of a pleasant experience for our investors and as painless as possible an experience for the homeowners involved in the process. We’re proud of our long history in this industry and our reputation in the business, and we hate seeing scams like this hurt others in the field.

How to Cut Through Earnings-Claims Garbage to Get the Truth About Tax-Lien Investing

About the author 

Charles Sells

Charles Sells is the founder and CEO of The PIP Group, a turnkey service provider that focuses on investments in distressed real estate assets including tax liens, tax deeds, traditional foreclosures, fix-and-flips and long-term cash flow acquisitions. He has been involved in tax lien investing for over 20 years, during which time The PIP Group has grown to become one of the largest agencies of its kind with nearly 1,000 individual and institutional investors worldwide.

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