Millions of dollars owed to individuals and entities that have lost their Baltimore properties through tax sale foreclosure has sat untouched in city coffers— some of it for years— with few of those entitled knowing of its existence.
More than 2,100 of those who lost properties after becoming delinquent on city taxes are currently owed a share of the $6 million pot of money, according to a Baltimore Banner analysis of Department of Finance records.
The majority of owners of the 41,000 properties that have appeared on the city’s annual tax sale list since 2016 have managed to keep them out of foreclosure by paying thousands of dollars in owed taxes, interest, and attorneys fees to investors who purchased their tax debt, The Banner reported last month.
But in more than 1,750 of those cases, the property owners did not pay the lienholders back within the allowable redemption period, and the properties were foreclosed on and the deed transferred — taking owners’ full equity along with them.
And the only redress claimable by those owners often doesn’t make it into their hands, The Banner found.
“It’s shameful that we haven’t been able to get it to the previous owner,” Councilmember Odette Ramos said of the excess funds, which she learned about while reviewing the budget during her first year in office. “I was, like, are you kidding me? We’re holding all this money — this is crazy.’”
The unclaimed funds are among a number of aspects of Baltimore’s tax sale system facing scrutiny from advocates and some elected officials. They say that the system harms homeowners, forcing them to come up with thousands of dollars to save their properties from foreclosure, and neighborhoods, by financially tangling up vacant homes.
The pot of funding — referred to as “excess funds” or “bid balances” — comes from payments that lien purchasers bid beyond the value of the due taxes when competing with others at the city’s tax lien auction.
The city has failed in recent years to put in place a process for notifying former owners of the availability of the funds, or how they can collect them.
“Currently if the original owner is no longer in the house, there is no other systematic way to contact them,” said Jack French, then spokesman for Mayor Brandon Scott.
Baltimore City has disbursed funds to 180 owners since 2020 — about $900,000 of the funds in 2021, $650,000 in 2022, and about $12,000 so far in 2023.
How property owners find out they are owed funds and can request them was unclear.
But $2.3 million of the funds has been sitting untouched since 2016. The median amount of time that an individual bid balance has been in the account is nearly 10 years.
In past years, the city finance department sent letters about the claims process to former owners at their latest address on record, said Edward Scrivener, an accounts manager with the agency. But city officials in recent years have stopped attempting to contact former owners, he told The Banner, noting that the majority of letters would bounce back because the city did not have accurate records of their updated addresses.
If the funds are not collected by former owners within seven years, the city can seek a court order to access the money for other uses, officials said. But the city hasn’t done that in at least the last dozen years that Scrivener has been with the department, he said. “Money pretty much had been sitting in the account,” said Dorothy Reed, deputy chief of the Bureau of Revenue Collections.
The city has been planning to begin posting a list of properties with unclaimed funds both on its website and in The Baltimore Sun twice a year, said Scrivener. The plan has been in the works for over a year, but action has been delayed as the city IT department creates a dedicated email address to manage requests related to the program, he added.
The department said that once that process for notifying former owners is in effect, it could turn to figuring out a use for unclaimed funds.
Officials declined to comment on The Banner’s analysis reflecting the magnitude of the held funds.
Members of a tax sale work group launched by the mayor in 2021 have suggested that the city direct funds left unclaimed — especially by defunct limited liability corporations and other absentee owners — toward an assistance fund for people facing tax sale, but no formal proposal has been issued. Close to 90% of the homes on the excess funds list were owned by individuals, with about 90% of the money owed to those former homeowners, as well.
“In a world that was more fair, people that are losing their houses to tax sale would get some kind of compensation for the equity in their homes,” said Margaret Henn, an attorney with the Maryland Volunteer Lawyers Service who represents clients facing tax sale. “While this wouldn’t fully compensate them for the equity in their homes, it would at least give them something for the fact that they lost their home to tax sale.”
In some neighboring jurisdictions, county officials send letters to former owners notifying them about the funds. Anne Arundel County has, like Baltimore City, experienced challenges in locating former owners, said Renesha Alphonso, director of communications for the county. Anne Arundel currently has nearly $3 million in its excess funds account. It distributed nearly $1 million in fiscal year 2021 and nearly $800,000 in fiscal year 2022.
Baltimore County currently has 71 properties on its excess funds list, amounting to over $1.7 million in unclaimed funds. It distributed more than $1.5 million in 2022 and over $2.3 million in 2021.
Baltimore City returns a smaller percentage of its bid balance account than either Anne Arundel or Baltimore counties.
Many former owners are owed just a few hundred or a couple thousand dollars — the median value owed is just $582, a minuscule fraction of the value of their lost homes. But in some cases, the owed amounts are far higher: 55 owners on the list are owed $20,000 or more. A few former owners are owed over $80,000.
And just as the city’s majority-Black census tracts are home to a disproportionate share of properties that have liens placed on them and are sold through tax sale foreclosure, the majority of the excess funds — $4.8 million— are owed to people and entities in majority-Black areas. The area is described as the “Black Butterfly” because of how majority-Black areas extend outward from the city center.
While the unclaimed amounts held in the fund are generally low, advocates say that for the often elderly homeowners who have lost their homes for as little as $750 in unpaid taxes, that money would amount to meaningful assistance as they must leave their homes. Nearly 600 former owners are owed more in excess funds than they had in liens initially.
“It’s so disproportionate to what they’re losing,” said John Kern, who manages the Stop Oppressive Seizures Fund, which provides assistance to people facing tax sale. “It’s just a little bit of money to help them find another place and try to resettle.”
Advocates also expressed concern that the obstacles preventing former owners from accessing these funds themselves have encouraged the growth of an industry that they say preys on them further: companies that obtain lists of people with unclaimed funds and deliver the funds to them — minus a hefty commission.
The little-known fund has begun receiving more scrutiny in recent years with Scott’s launching of a tax sale work group in 2021, charged with developing proposals for “comprehensive reform” and the creation of a tax sale ombudsman for the state in 2020.
A bill proposed by the ombudsman, Bob Yeager, and introduced in January by state Del. Vanessa Atterbeary, a Columbia Democrat, would require each county to establish a process for notifying former homeowners about the availability of, and process for claiming, excess funds within 90 days of delivering a deed to a purchaser. The bill was voted out of subcommittee last week and is likely to be approved by the full House of Delegates on Tuesday, Atterbeary said.
The bill would also prevent counties from requiring former owners to obtain a court order to access the funds, as many currently do.
“That’s really a high burden for someone who is not only low-income but just lost their home, and now they either have to find an attorney or find a legal service provider to get them a court order to claim these funds,” said Yeager. “Excess funds are often a really critical source of income or source of finance that they really need,” he added, “so we want to make that process as easy as possible.”
You can claim excess funds at Baltimore City’s tax sale office (Room 1 of the Abel Wolman Municipal Building at 200 Holliday St.) You will be asked to present photo identification and an affidavit that is dated and signed by you and a notary public stating that :
a) you are the former owner
b) you agree to indemnify and to hold harmless the city for the dollar amount of the balance, and
c) you searched the Circuit Court docket and found no action or motion filed or pending seeking the balance. You can search by your name on https://casesearch.courts.state.md.us/casesearch/. The website will list the documents filed in the foreclosure.
If the former owner has given their permission for you to collect the balance on their behalf, you must also submit a limited power of attorney signed by the former owner. If the former owner is deceased and was the only person in title, then you must also submit a copy of the estate documents.
You can also mail the documents to “Delinquent Accounts-Tax Sale, 200 Holliday Street, Room 1, Baltimore, MD 21202.”
Read The Baltimore Banner’s guide on how to protect your home from tax sale here.