CUMBERLAND — When the auctioneer calls for bids at the annual county tax sale, there’s more going on than meets the eye, or the ear. What’s happening involves a significant dose of state law, a bit of county collections efforts, homeowners trying to save their property and investors trying to make a buck.

In the end, if all goes well, the county collects the back property taxes it’s owed. There are more listings this year than usual, said Jerry Frantz, county finance director.

“Without a doubt, it’s the economy,” said Frantz. “It’s something we dislike. It’s hard to tell people we’re going to sell their house,” Frantz said. The sales are mandated by state law which requires the county to sell a property when the owner’s property taxes are delinquent. Citizens having trouble paying their water and sewer bills may want to look into the Maryland homeowners property tax credit program, Frantz said. The program is designed to help out taxpayers and full details are available on the website listed below. The statistics show that people are not paying their taxes on time, since tax receivables are up 35 percent this year, Frantz said.

“That’s it, we have a lot of calls from people that are out of work or starting new jobs,” said William Lashbaugh, manager of the county tax and utility office.

“It’s a hammer to get the taxes paid,” said Frantz of the sale. “It’s a last resort,” said Lashbaugh. The county wins out by having the taxes paid, plus interest and any back water and sewer bills.

Allegany County waits until three years of delinquency to list the property for sale, Patti Corley, an accountant with the county tax and utility office, said. Delinquent property owners receive a written notice 30 days before the sale, that they are behind and their property is set for listing at the tax sale. For 2011, 1,663 property owners received the notice that their property could be sold. Of those owners, 391 ended up on the property tax sale list published April 27 by the county in the Times-News. Once most homeowners get the letter, they pay up, at least in part. If the property owner pays the oldest delinquent year, the property can be removed from the sale list.

For the 2010 sale, 1,467 notices were sent out and 313 were listed for sale; for the 2009 sale, 1,246 notices went out and 231 properties were listed for the actual sale. Even if the property sells at the auction, the property owner doesn’t necessarily lose the property, Frantz said.

About 90 percent of the properties sell during the tax sale. Bidders must pay at the auction, but may pay by check. Bidders must register, and about 30 are usually successful in buying properties, often multiple properties.

The delinquent property owner has six months after the sale to cure the delinquency, called redeeming the property, but the full amount must be paid, Frantz said. The reality is that the property owner has more than six months, including an additional two to three months during court foreclosure proceedings before the deed is actually transferred, said Corley. The winning bidder can’t start foreclosure proceedings until the six-month grace period expires. An interest rate of 1 1/2 percent is due on the delinquent taxes.

The county hires an auctioneer for the tax sale. While the sale could go for more than one day, it’s usually done by noon. The listed opening bids are the price at which the county recovers the taxes and fees associated with the property. Many properties sell for above the opening bid, Frantz said. Among the bidders for the properties are three types of people, Frantz said. Sometimes a neighbor is interested in purchasing a property that adjoins theirs. Other bidders want to buy the property at a discount to rent for others or live in as a residence.

The largest group of bidders, though, are investors. Many travel city to city and state to state to bid on properties. Bidders have come from as far away as California, Frantz said. Frantz thinks it may be that the volume makes up for the relatively small return he thinks is possible for investors. Investors get their winning bid price back with interest of 1 1/2 percent per month or 18 percent annually.

Of course, they can also sell a property purchased at a discount, but a high percentage of the properties are redeemed by the previously delinquent owners.

Frantz thinks that the once yearly billing may have something to do with people getting behind.

“We don’t bug them,” he said. “We’re not on their backs,” so people lose sight of how far behind they may be getting.

For more information on the tax credit program, visit: http://www.dat.state.md.us/sdatweb/htc.html.

Contact Matthew Bieniek at mbieniek@times-news.com