What Would Property Tax Amnesty Mean For Purchasers Of Municipal Tax Liens?

Yesterday, the Hartford Courant ran this article about Governor Rell’s proposal for property tax amnesty.

According to the article, Governor Rell is proposing lifting the mandatory 18 percent penalty charged to property owners who are late on payment of their taxes. The theory being that this would provide municipalities much needed cash.

My question is what happens to lien holders who are not the municipality?

Towns across Connecticut sell property tax liens to private investors at auction.

A purchaser of municipal tax  liens “steps into the shoes” of the town having all of the same rights as the town – including the right to 18% interest per year. Further, a purchaser of those liens can take possession of the property through the initiation of a foreclosure action.

Would legislation providing amnesty on municipal tax liens would amnesty apply to property owners whose liens have been sold to private parties?

If the legislature gives amnesty who are delinquent on their property taxes then it will be taking from those who purchased the liens expecting a return on their investment.

On the other hand, if the legislature only applies amnesty to liens held by municipalities then only some property owners would receive amnesty while others would still have to pay interest at a rate of 18% per year.

It will be interesting to see how the legislature sorts out this issue.