What the hell's a tax cert and why should I care?
Most of you know very little about how real estate transactions are conducted. They involve some of the most important services that local government provides. Exhaustive title records maintained at the county permit you to search every square inch of real estate for hundreds of years. In addition, cities like Allentown keep a record of the real taxes paid on each parcel and whether anything is owed. These must be paid before anything else, including mortgages.
If you're buying or refinancing in downtown Allentown, your title agent or lawyer will contact the city and ask for something called a tax certificate. For $25, the City can tell you exactly what is owed and whether taxes are delinquent. Without a tax cert, most title agents and lawyers will postpone a settlement because it's needed for a clear title. In Allentown, don't plan on settling anytime soon. The City will take your money and process your request for a tax cert, but it won't be issued. The City stopped doing so on January 14.
When I called Allentown yesterday to find out why, I was transferred to City Communications Director Mike Moore. That's not even his real name, which I find completely outrageous in local government officials. I would expect an honest government worker to tell me who he really is, but Moore uses a stage name. (His real name is Mike Korp). I pointed this out in a voice message to Moore (Korp), and as I suspected, he refused to respond.
But I also have friends in the title biz. One of them called, too. He is actually one of those waiting for a tax cert so he can schedule a closing. He was told he'll just have to keep waiting. When he asked for the reason for this holdup, he was told the decision came from "management."
Bob Cimerol, who runs First-United Land Transfer, has expressed his frustration in an email to City Council.
We have been informed by individuals who work for the City of Allentown Treasury Department that they were instructed by management on January 14, 2016 not to release any tax certifications to any parties until further notice. This order complicates real estate transactions for all properties in the City of Allentown since a tax certification is necessary to convey clear title. City administration is not giving a reason for this hold action. This action will delay real estate closings in the city for buyers, seller, Realtors and lenders. Your help in resolving this issue is greatly appreciated.My guess is that this has something to do with Northeast Revenue, a privatized tax collector with a contract to collect delinquent taxes in Allentown. Two former City officials, Ass't City Solicitor Dale Wiles and Finance Director Gary Strathearn, have pleaded guilty to participating in a bid-rigging scheme for Northeast Revenue at the instance of Fed Ed, identified in court papers as Public Official No. 3. Northeast had contributed $15,000 to Fed Ed's various campaigns. Wiles and Strathearn created a bogus panel that falsely gave Northeast higher scored that two other firms that were rated higher.
Northeast would later rely on this bid-rigging scheme when it tried to convince Fountain Hill to allow it to do its collection work. According to Fountain Hill's July 22 minutes, Northeast Revenue told borough officials that it was interviewed by a panel that did not include the mayor. An ordinance that would permit Northeast to collect delinquent taxes in Fountain Hill was tabled on September 8, but approved in October. It's unclear whether a contract was ever fully executed.
Strathearn's plea was entered on January 11, and the decision to stop issuing tax certs became effective January 14.
Though Fed Ed can't be blamed for the heavy snowstorm, his refusal to treat it seriously is one reason why many residents were unable to dig out of their homes and get to work. And the suspension of tax certs means that people will be unable to get into their newly purchased homes, too.