The DC Government stole our Petworth home, 929 Farragut St, just east of Georgia Ave, through a classic screwup. It was an improper sale of the deed through an improper tax sale based on completely incorrect property taxes. Now the house is boarded up and no one is living there. If it happened to us it could happen to anybody! We’d like to get the story out to other DC residents and taxpayers. Our FULLY PAID FOR $450,000. house was sold for $40,000!! I’d like to tell you the whole story.
The short version is that I got a ten times higher than normal property tax bill. When I went in person to DCRA I was told that someone had put it into the vacant tax classification. The house had been under renovation when it was misclassified. By the time I got the bill and went down there it was already rented and occupied. They didn’t know how to get it out of this classification. I went many times and called many times and was never able to get the tax classification changed even though it stayed occupied. Eventually the DC city council shortened the period of time during which you could dispute a tax bill from three years down to six months. Without notice they sold the hose for taxes!! We have been trying for the last FIVE years to get this rectified!”
I’ll be honest I normally very skeptical of claims like this but I decided to sit down with the owners because the case seemed so wild. The owners Dennis Dyer and his partner Amy Marx sat down with me last week to discuss the case. I’ll be honest again, the case is a bit complicated and while Mr. Dyer and Ms. Marx had folder after folder of affidavits and leases and other communications it still wasn’t completely clear to me. As best I can understand it seemed like the house was accidentally placed into vacant status and was sold due to unpaid tax bills.
This is likely a case for a proper investigative reporter but I’d like to throw it out to you guys – do you think it’s possible (in this specific case) that the city could have accidentally placed a home into an incorrect tax status and sold it before the owners were able to correct the problem? For those who have a lot of free time, after the jump you can find more details.
If you do think the city made a mistake – since the house has already been sold – do you think the owners will be able to recoup their losses? Has anyone else heard of a similar situation?
Ed. Note: The WBJ’s Michael Neibauer recently wrote about D.C.’s tax lien market here.
Update: DCRA also encourages people to look at the Complete Guide to Vacant Property Compliance FY 2011
After the jump you can see a detailed letter sent to the mayor and a full timeline of the incident submitted by Ms. Marx.
I am asking for your help because I am desperate and have exhausted all other avenues of recourse and am in danger of losing the single family house that I rent out. It was mistakenly put in class 3 and I am asking the city to correct it’s tax status. I have owned 929 Farragut St NW, Washington, DC since 2001 and have rented it out continuously except when I was having maintenance and improvements done to it. In 2005 during a hiatus between tenants when painting and general repairs were being done to clean up the house for new tenants, the property was deemed vacant under a vacant tax rule which the council has since repealed. While I was diligently working to rectify the erroneous classification, the city’s Office of Tax and Revenue sold the property out from under me. My property was worth $300,000 and was completely free and clear of any mortgage debt when OTR sold it to Lab Liens, a company based in Chicago for a mere $40,000. Because of unfortunate timing, I was caught in the unfair complications of this rule. The property was moved from class 1 to class 3 without any cause, which increased the tax bill by a factor of ten.
Let me briefly introduce myself. Over the past four decades I have improved the city’s housing stock, my company buys derelict properties, upgrades them, rents them and eventually sells them as improved and viable residences. I have always paid my property taxes in full and in a timely manner.
When the mistake was made with the property in question I immediately went to the Department of Consumer and Regulatory Affairs where the staff was completely uncooperative and evasive. After many months spent trying to find out what to do I eventually found my way to James Aldridge who told me he would work on it and that I should not pay the tax in the meantime because a CORRECTED TAX BILL needed to be issued first. During that time a federal investigation of OTR was taking place which resulted in many terminations and a high profile conviction, with Harriette Walters going to prison. At this time Mr. Aldridge was forcibly terminated. He had been in possession of my file; after he left I could not find out who had taken over his position, no one else in the department would communicate with me or take up my case.
So, in the five years since the property was incorrectly put into the class 3 tax classification by an employee at OTR, I have been working diligently to get the classification corrected Despite extensive efforts including calls, emails and visits to a variety of offices and officials, I have not been able to get OTR to correct their original mistake. The DCRA, which should have provided me with a CORRECTED TAX BILL, has failed to do so. Instead I have been passed back and forth between OTR and DCRA, getting the runaround for years now. I have also appealed to Muriel Bowser’s office in whose ward the property is, whose legal adviser, legislative counselor Rob Hawkins told me to sue the city, but that is an impossibility because of sovereign immunity.
Meanwhile believing the situation would be remedied because the property WAS RENOVATED AND OCCUPIED, I did not pay the tax attached to the erroneous classification. That tax was ten times higher and a hardship. I was following Mr. Aldridge’s advice and waiting for justice to be done. Last summer I did manage to get my property reclassified as not ever having been vacant; however the ruling only went back to 2007. Ironically, my work benefitted Lab Liens, by providing a property tax credit! I, however, have received no benefit. To prove that in fact that my property was not vacant in 2005 I have provided leases, water bills, affidavits from workmen, and cancelled checks to city officials. One of them, the acting manager for the vacant property unit at DCRA told me and my associate that he understood that my property was never vacant and that a mistake had been made, and then cited rule 47-825.01(h-1) to the effect that city employees cannot do anything about mistakes made more than three years ago “except in matters of substantial harm.” It is more than clear, from what I have explained, that I have suffered substantial harm. The city council must recognize this.
Meanwhile the unworkable nature of the class 3 classification was proven in 2009 when the city council dealt with it and decided it would no longer apply to any properties in the city. But I am still suffering the consequences of a mistake made within the context of this unworkable law. Additionally, both I and my property manager are being sued by Lab Liens. This is a real life problem resulting from the city’s mistake, the consequences continue to this day drawing in and causing problems and expense to myself and other members of the real estate industry. This mistake needs to be corrected. I am asking you to pursue DCRA and OTR so that this incorrect class 3 classification of my property is corrected. I am a voter, an employer and pay substantial property taxes. I am, of course, happy to furnish you with documents, answer questions or help you in any way. Thank you for your attention to this matter.
August 2001 House purchased at auction, paid in full
offered for rent
rented to Section 8 tenants, the Bond family
2002 rented to the Bond family
2003 rented to the Bond family
2004 rented to the Bond family
February 2005 The Bond family moves out
March 2005 Squatter on the premises claiming to be a relative of
the Bond family
Police refuse to order him to leave, saying it’s a civil
Squatter persuaded to leave by the owner
Property left trashed out
House cleaned , locks changed
Repairs and renovation commence
July 2005 New management company hired, Habitat Real Estate
August 2005 Property offered for rent
September 2005 Property shown
PROPERTY DEEMED VACANT, PUT IN CLASS 3
TEN TIMES HIGHER PROPERTY TAX BILL
OWNER GOES TO DEPARTMENT OF CONSUMER
AND REGULATORY AFFAIRS (DCRA)
NO HELP, DISINFORMATION
OWNER CALLS DCRA
NO HELP, MISINFORMATION, DON’T KNOW
HOW TO CORRECT MISTAKE
October 2005 New tenants approved
OWNER RETUNS TO DCRA
NO HELP, NO CORRECTION
OWNER CALLS DCRA
NO HELP, DON’T KNOW HOW TO
November 2005 Contract signed with Habitat Real Estate
OWNER GOES TO DCRA
NO ONE KNOWS HOW TO CORRECT MISTAKE
December 2005 Lease signed, new tenants move in
OWNER GOES TO DCRA, HOUSE REMAINS AT
VACANT TAX RATE FOR THE NEXT FOUR
YEARS THOUGH CONTINUOUSLY OCCUPIED
2006 HOUSE SOLD BY CITY TO LAB LIENS
Out of state, tax lien investors, funded by unknown
$400,000 house, owned free and clear sold for $40,000
No notification given to owner
Tenants still renting house
2007 OWNER CONTINUES TO TRY TO GET HOUSE
Owner tries to get his house back
Tenants still renting house
2008 ORIGINAL OWNER CONTINUES TO TRY TO GET
HIS HOUSE BACK
Tenants still renting house
2009 ORIGINAL OWNER SUCCEEDS IN GETTING
DCRA will only reclassify back to 2006
NEW OWNER INTIMIDATES AND BLUFFS
TENANTS INTO MOVING
using Loewinger and Assoc.
House boarded up
2010 Original owner continues to fight to get his house back
on the basis of tax sale being based on wrong taxes
2011 Original owner continues to fight to get his house back