Unpiad Council rates.

[JamesG]

Hello There all!

I'm looking to find out if it is possible to 'discount' the Shire council's claim for outstanding rate payments (over three years) on a propery before they follow through with an auction on the place. I have heard it has been done with bank foreclosures where the bank is offer a price for the mortgage somewhat less than the amount owed because the banks don't particularly want to go through the courts.

Any suggestions?
JamesG

 

[Mike]

Hi James,

Could you provide more detail about who is doing what to who. The only bit I understood was that someone didn't pay their council rates for three years. Are you saying that the Council have repossessed the house?

Mike

 

[XBenX]

Here is a story, I often retell it, and i cry each time I do

I noticed in a national paper public notices section some info on a property in Maianbar (sp?) in the Royal National Park close to Bundeena it was being sold due to unpaid council rates as the owner has died it was a 2br shack on the water 800m2 sloping but w/ a flat building area.

This was cheap at the time but I didnt want to live there.... its in the middle of nowhere and i thought id have problems w/ tenants so i didnt buy (stupid me)

Anyway it sold mid 2001 for 565K you'd be fighting ppl off today at $1.5m

:````(

Moral of story - unpaid council rates can be an opportunity but you have to remember these properties go to auction... market forces determine the price.... the only time you benefit is where a market imperfection exists for example lack of info - the only reason this went cheap was poor advertising by a dodgy agent

 

[geoffw]

unpaid council rates can be an opportunity but you have to remember these properties go to auction... market forces determine the price

In fact, I have been to such an auction where properties went for over the market prices, because everyone assumed they would be getting a bargain.

 

[XBenX]

true, its like the mortgagee in possession sales - so many attending the sale is usually more than the price the auction would of brought if it was a normal auction.

btw before someone posts - im sure geoff and myself both know if someone paid $X on the day then that is the "market value"

 

[JamesG]

Council replies!

Thanks to all who replies to my query on 'discounting' the outstanding council rates. The answer I got after speaking to the chap in the local shire who handles the procedings was "Definately NOT - It's gone too far" meaning that at some stage they would have probably listened to some offers to pay the debt but at this stage they want their money (<$15k's worth). So if a property reaches auction stage then it's too late for negotiations.
The principle I refering to about 'dicounting' bank mortgages if found at http://www.creonline.com/articles/art-190.html if any one is interested.
Thanks,
James

 

[Mike]

How did the council debt blow out to $15,000 in 3 years? What interest rate were they charging on the unpaid amount? Are owners adequately informed that interest is being charged and by how much or is it added to the total charge so it is hidden? Does anybody know how long they allow rates to go unpaid before they repossess?

Sorry about all the questions but I know somebody who didn't receive rate notices by the council but was still charged interest when the rates were not paid. The council screwed up by sending the Rates Notice to a former rental address instead of the property the Rates Notice applied to. They also hired an investigator who made enquiries at the former rental address. The tenant had disposed of the Council letters instead of Returning To Sender. They also enquired to the Property Manager who claimed she didn't know the forwarding address even though the property was bought through her Agency.

It never occurred to the Council or Investigator to simply send the Rates Notice to the address ON the notice. Despite their ineptitude the Council still applied the penalty. Yes, I know the owner should have made enquiries about the missing rates notices but should forgetfulness be punished so harshly?

Fortunately, my friend let them know he was seeking advice from the NSW Ombudsman and his own Solicitor. Eventually, after much "to and frowing" the penalty amount was reduced by nearly half. What a drama! My cynical side thinks these bureaucrats don't care about causing financial hardship for people and then repossessing their home.

Regards, Mike

 

[JamesG]

True words Mike.

I was shocked to find out how much the council had allowed the outstanding rates bill to amount to in the propery that I was looking into. Surely the owner had to know that he had a rates bill that was accumulating (with a large interest hike I'm sure). The owner did know, it seems, but due to financial difficulty wasn't able to pay the amount (that is his story at least - I detect a small amount of ,perhaps fueding, between the council and the owner. Stubbornness may be involved here) yet didn't apply for help or leaniancy from the council. I don't know the full story.
The reason I asked my original question about 'dicounting' outstanding council rates was to see if it was possible to find some win/win situation with the current owner. This it seems, at least according to this council, not to be so.

Thanks for your reply - I will inform the owner that such a case has happened and that he may have a chance to lower his rates bill.


JamesG