The Independent Gazette has investigated a recent complaint from some Luzerne County property owners who agreed to speak with the paper only under the condition of anonymity. The property owners had fallen behind on their taxes, and their home was to be sold via a Private Bid Agreement to Swinka Realty Investments, LLC, of Olyphant.
The property owners told the Gazette, “We wanted to pay on our tax bills, but because of Swinka’s bid we were told [by the Luzerne County Tax Claim Bureau, Northeast Revenue Service, LLC] we would not be allowed to make any payments while the property is under contract.” The sale to Swinka was approved in August 2012 and Swinka has since failed to pay anything on the property, or transfer the deed, as required. As it stands, no entity is currently paying or collecting taxes on this and many other properties, and our investigation found dozens of properties sitting unoccupied in limbo with Swinka allegedly in control of them because of their private bid contracts. The property owners said further, “All the while, We, the People, the taxpayers of Luzerne County are bankrolling Swinka’s deal[s] until they decide [whether] to complete them or not.”
Clarification of the bid process
A property appears on an Upset Tax Sale after its owner fails to pay their property taxes for three consecutive years. At this sale a buyer purchases the property with all liens and mortgages attached to it, except for the property taxes, which are to be forgiven. If a property does not sell at this sale, it then appears on a Free and Clear Sale where the purchaser—the winning bidder—acquires the property free and clear of all liens and mortgages. In the interim between these two sales, state law allows for a private bid to be placed by anyone other than the owner.
Once such a private bid is placed then 10% of bid price or $300, whichever is greater, is to be paid to the county tax claim bureau and the property is then placed for public bid via a newspaper notice. If no one else submits a higher bid on the property, then the initial bid is submitted for approval to all taxing bodies to which are due outstanding taxes, since those taxes will be forgiven in this sale.
A letter is then sent to the county manager, currently Robert Lawton, who is to present the matter to Luzerne County Council for approval, in accordance with the Home Rule Charter, Section 2.09(B)(6): To approve, by resolution adopted by affirmative vote of at least a majority of its current members, agreements to acquire, lease, sell, convey, vacate, or abandon land, buildings, or other real property.
However, according to Luzerne County Council Members Edward Brominski and Stephen J. Urban, no such approval votes have ever been presented to the council. Messages left for County Manager Robert Lawton seeking comment were not immediately returned.
Explaining the entire process a bit further, the county manager and council chairperson are to sign the letter requesting approval, thereby indicating that the winning bid has been approved. Northeast Revenue then files a Petition to the Court asking it to approve the bid offer. This document is known as the Petition to Approve Private Sale. The court—Judge Vough in cases of tax claims—then approves the sale and issues an order stating the same. Vough, who himself failed to pay taxes on two of his properties for years, and only this year brought them current, is the only Luzerne County judge who is able to hear property tax issues.
Following this court approval, according to Northeast Revenue’s website, their own policy states that the bidder has fifteen days to tender payment for the bid amount, transfer tax, and other fees.
Independent Gazette requested via the Right-to-Know law a copy of all Private Bid Agreements for 2012 and 2013. We received forty-two agreements, forty of which named Swinka Realty. The forty properties are encumbered by county taxes in excess of $248,816.96 according to Northeast Revenue’s website.
Our initial investigation indicated only five of the forty bid agreements actually transferring ownership to Swinka, but according to attorney John Rodgers, solicitor for Northeast Revenue, all but twenty-eight properties have been transferred to Swinka, many in just the few days preceding publication of the July Gazette. Rodgers also thanked the Independent Gazette for bringing this matter to his attention, and said, “Northeast Revenue will immediately file petitions to void the sales of the twenty-eight properties remaining unsatisfied, unless by some mere chance Swinka should come in and pay for the remaining twenty-eight properties before we can file.”
Section 6 of the Northeast Revenue policy also states: “If the successful bidder fails to comply with the terms and conditions of the sale, he will forfeit ALL monies already paid to the Tax Claim Bureau.”
Attorney Rodgers explained, “Bidders who fail to complete the sale process on any property will be barred from any future bidding. Effective immediately, all private bid sale contracts will have the fifteen-day policy stipulated in the contract, so the bids automatically void on the sixteenth day.”
The property owners who spurred this investigation told the Independent Gazette that a representative from Swinka Reality offered to rescind Swinka’s bid—allowing the property to fall free, so the homeowner could then enter into a payment agreement with the county—in exchange for a fee.
Phone messages left for Swinka seeking clarification were not immediately returned.