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Tax Title Properties: Proactive Approach Could Address Backlog and Reduce Risk

Tax Title Properties: Proactive Approach Could Address Backlog and Reduce Risk

February 27, 2018

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King County has a growing portfolio of over 1,200 tax title properties, which are generally small and of little value. Many of these properties are being used for private purposes, and holding on to these properties is risky because the county may be held liable for incidents that occur on them. While the Real Estate Services Section of the Facilities Management Division is taking some steps to improve its process for selling tax title properties, it could be more proactive in understanding and managing the risk of this portfolio. We make recommendations to improve the management of tax title properties and reduce overall risk to the county.

Status

Of the 7 recommendations:

DONE 7 Recommendations have been fully implemented. Auditor will no longer monitor.
PROGRESS 0 Recommendations are in progress or partially implemented. Auditor will continue to monitor.
OPEN 0 Recommendations remain unresolved. Auditor will continue to monitor.
CLOSED 0 Recommendation is no longer applicable. Auditor will no longer monitor.

Summary

King County has a large and growing portfolio of more than 1,200 tax title properties that are spread across the county. These properties, which are held in trust by the county in cases where property owners fail to pay their taxes and the properties fail to sell in a foreclosure auction, often have characteristics which make them difficult to sell. It is the responsibility of the Real Estate Services Section of the Facilities Management Division to both manage and, when appropriate, sell these properties.

The County faces a risk of liability from holding a large portfolio of tax title properties. Many of these properties are being used for private purposes, which may increase risk to the county. For instance, we identified five separate play structures on tax title properties in King County (see examples in pictures at right). We also found instances of properties being used for access roads, outbuildings, or decks. The Real Estate Services Section (RES) of the Facilities Management Division devotes limited staff time to the management of the properties and does not have mechanisms in place to find and mitigate risks such as these. In the event of an accident on a tax title property, it is possible that the County could be held partially liable for damages.

While RES has taken key steps that will help increase sales of tax title properties, RES is generally reactive in its management of these properties. When RES learns of issues on tax title properties, it sometimes works with the Office of Risk Management to find and begin risk mitigation strategies. These steps, however, may be insufficient and sales of tax title properties are the best way to mitigate risk. Other local jurisdictions are more proactive in managing the risks of their tax title portfolios. For instance, using maintenance requests to prioritize sales, publishing updated lists of properties for sale, and alerting nearby property owners of upcoming sales.

We recommend that RES more proactively manage the risk of its tax title properties by assessing the risk, use, and salability of individual properties and by taking immediate action to address the risks posed by key properties identified by this audit.

Reports related to this audit

Currently, there are no related reports to this project.


Audit team

Larry Brubaker, Sean DeBlieck, and Brooke Leary conducted this audit. If you have any questions or would like more information, please call the King County Auditor's Office at 206-477-1033 or contact us by email KCAO@kingcounty.gov.

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