AG Zoeller: New legislation will prevent tax sale fraudsters from victimizing struggling Hoosier property owners 

INDIANAPOLIS, Ind. – Indiana Attorney General Greg Zoeller today thanked state lawmakers for passing legislation that aims to prevent tax sale fraud perpetrated against struggling Hoosier property owners.

County auditors and other local officials who work in the tax sale process of homes where delinquent property taxes are owed recently alerted the Attorney General’s Homeowner Protection Unit to this fraud scheme. In the scheme, the fraudsters approach distressed property owners who are delinquent on their property taxes, and deceptively convince them to sign quitclaim deeds in exchange for minimal amounts in order to seemingly make their delinquent tax problem go away.

Typically the homeowners don’t know they are legally entitled to receive the surplus between the tax owed and the price the house sold for at auction. Because of this swindle, some victims were entitled to surplus amounts upwards of tens of thousands of dollars that they lost out on. This surplus may be considered a rough equivalent to their home’s equity, but by the time the fraud was discovered, some of the victims were both out their home and out the surplus money to which they were entitled.

Last month, the AG’s Office filed a $9 million lawsuit against various entities for allegedly perpetrating this scheme against at least 48 vulnerable Hoosiers, swindling them out of amounts ranging from $2,000 up to $900,000.

After uncovering this widespread fraud scheme, Zoeller worked with members of the Indiana General Assembly to pass legislation to close gaps in Indiana code and better protect Hoosier property owners.

“This is a scam that has occurred in urban areas such as Marion County and Lake County, as well as more suburban or rural areas such as Johnson County. Homeowners who were already in a difficult bind financially have been harmed by these scam artists who promised an easy way out. While my office continues to investigate this scheme and hold violators accountable, legislators took quick action on a bipartisan basis to stop this fraud from occurring in the future and make sure homeowners receive the surplus owed to them, which may be enough to help them get back on their feet,” Zoeller said.

Senate Enrolled Act 355 addresses gaps in state law to prevent homeowners from being cheated out of surplus tax sale amounts to which they are entitled. It would ensure that any entity that purchases a property with a tax sale surplus must pay the full surplus amount – in addition to the amount of taxes owed – in order to redeem the property, so that the surplus gets returned to the original property owner.

Today at the Statehouse in Indianapolis, Zoeller formally thanked State Rep. Bill Fine (R-Munster), State Sen. Rick Niemeyer (R-Lowell), State Rep. John Price (R-Bargersville), State Rep. Cherrish Pryor (D-Indianapolis) and State Rep. Hal Slager (R-Schererville) for their work on this legislation during the recent session.

“Senate Enrolled Act 355 will protect homeowners, who are struggling not to lose their property, from being victimized by unscrupulous, property speculators,” Rep. Pryor (D-Indianapolis) said. “The bill also will assist local county officials in dealing with problems associated with tax sales. It is a good bill that received bipartisan cooperation and support.”

“I commend the attorney general for being proactive in protecting taxpayers from fraud, which has become a real area of concern for Hoosier homeowners who are unaware they are entitled to a surplus from difference of the taxes owed and the price of the house they bought,” Rep. Price (R-Bargersville) said. “This act also incorporated a portion of House Bill 1318, which I authored, that gives the attorney general the power to enforce current law, which regards agreements for compensation to locate, deliver, recover or assist in the recovery of money deposited in the tax sale surplus fund.”

SEA 355 has passed the Indiana General Assembly and awaits consideration by the Governor.

“I am extremely pleased with the overwhelming support that Senate Enrolled Act 355 received from the Indiana General Assembly and the Attorney General’s Office,” Sen. Niemeyer (R-Lowell) said. “This bill gives the attorney general the power to enforce current laws pertaining to tax sales, helping ensure that Hoosier homeowners are protected against fraud.”

“I appreciate the attorney general working quickly to help Hoosiers around the state and in Lake County who have fallen victim to tax sale scams,” Rep. Slager (R-Schererville) said. “The updates to our code implemented in SEA 355 should prevent this from taking place in the future.”

“I commend the attorney general and my colleagues who worked so hard on this legislation,” Rep. Fine (R-Munster) said. “This proposal will save Hoosier taxpayers money while giving the attorney general a powerful tool to protect homeowners from tax sale fraud.”

Zoeller added the AG’s Office’s investigation into this fraud scheme continues. Homeowners who suspect they have been defrauded are encouraged to file a consumer complaint with the Attorney General’s Office at www.IndianaConsumer.com or by calling 1-800-382-5516.

To avoid being defrauded, Zoeller urges any distressed homeowner facing a tax sale due to unpaid property taxes – or foreclosure due to unpaid mortgage payments – to first seek legal advice from a qualified attorney before engaging in any quitclaim deed or other legal transaction.

Free legal advice is available from the Indiana Foreclosure Prevention Network at www.877gethope.com or from Indiana Legal Services, which recently received a grant from the AG’s Office to support this type of counseling.