A prolific purchaser of D.C. property tax liens is the subject of a District government lawsuit filed on behalf of delinquent taxpayers who are threatened with having to pay high legal fees in order to reclaim their properties.
D.C. Attorney General Peter Nickles last week filed a consumer protection lawsuit in D.C. Superior Court against Chicago-based Aeon Financial LLC, which describes itself as “one of the nation’s leading purchasers and servicers of delinquent municipal property tax liens.” The firm bought 445 D.C. liens in 2008 alone — 35 percent of all sold — during the annual tax auction.
The two entities are facing off in court for the second time in four months. Aeon sued the Office of Tax and Revenue in September over its decision to auction only those properties with delinquent tax bills of $1,200 or more. The lawsuit, which the District ultimately won, delayed the sale until November.
» 1,079 properties sold in 2009, totaling $10.77 million
» 1,366 sold in 2008, totaling $21.3 million
» 2,082 sold in 2007, totaling $6.7 million
D.C. law allows tax lien holders to recoup some expenses, but Aeon “has engaged in a pattern of charging and collecting impermissible or excessive legal fees” of nearly $6,000 per property, the District alleges in court documents. Those are costs that many homeowners “will falsely believe that they must pay.”
“As a party to these cases, the District has an interest in ensuring that foreclosure proceedings are conducted fairly and are not perverted to extract excessive and unreasonable attorneys’ fees from District residents,” D.C. attorneys argue.
Neither Aeon Financial nor its attorneys at Schwartz & Associates returned calls for comments.
Jessica Tomback’s Belt Road Northwest property was sold to Aeon at the Sept. 18, 2008, tax sale for $8,005, though she owed less than $1,500 in back taxes. On March 20, according to the lawsuit, Aeon served Tomback with notice that it had started foreclosure proceedings. Tomback paid her tax bill, but received a payoff statement in August demanding $4,750 in legal fees and $959.99 in costs.
“When it came in, I was floored,” Tomback, one of five aggrieved property owners named in the lawsuit, said Wednesday. “We can’t afford it, one, and it doesn’t seem fair. We thought, really, what could they have possibly done?”
Delinquent property owners have numerous chances under D.C. law to pay their tax bill before forfeiting their holdings. Not until six months have passed and foreclosure proceedings have been started is the lien holder due reimbursement for more than $300 in attorneys’ fees.
