Bill would streamline tax certificate procedure

County treasurers would lose the ability to issue tax deeds without a public sale under a bill advanced to select file Jan. 17.

When a property tax bill goes unpaid, interested investors currently can purchase a tax sale certificate. The certificate pays 14 percent interest on the taxes due. If the tax bill remains unpaid, investors can choose to begin foreclosure proceedings. The most common method involves a judicial foreclosure of the tax certificate to gain ownership of the property.

The second method allows a county treasurer to issue a tax deed without a public sale of the property. This method would be eliminated under LB370, a bill introduced by Lexington Sen. John Wightman.

According to the bill’s statement of intent, repealing the provision would place all lien holders on a fair, level playing field.

Several senators voiced concerns over the proposed change. Omaha Sen. Burke Harr said removing the tax deed structure would be problematic for all involved.

“By eliminating the provision, a property could feasibly sit for years without taxes being collected,” Harr said. “We want to encourage people to purchase tax certificates to keep funding for schools.”

Schuyler Sen. Chris Langemeier instead suggested changing the process used to notify property owners of a past-due tax bill.

“I think the notice is the problem,” he said. “They get this 30-day notice and don’t know what it is.”

Wightman agreed to discuss possible amendments to the bill before it reaches the second round of debate.

The bill was advanced to select file on a 40-0 vote.