The American Ninja August 20, 2008

http://www.landandbiz.com

What do the traditional Japanese Ninja and the the American Ninja have in common? Both destablize and cause social chaos. While traditional Ninjas allegedly intended to destabilize and cause social chaos in enemy territory or against opposing rules, the American Ninja never intended to do anything but make money.

The American Ninja is actually an acronym, which stands for (N)o (I)ncome, (N)o (J)ob, no (A)ssets. Apparently, HCL Finance, who dubs itself “Home of the No Doc Loan,” coined the term during the go-go days of the real estate bubble. Indeed, this “innovative product,” like so many others, was a driving force in the boom.

So, combine Salomon Brothers’ Lewis Ranieri’s idea of buying mortgages, bundling them, and issuing bonds with the bundles as collateral and the Ninja loan, and we have the perfect recipe for disaster. The US housing market is far from bottom and the effects of ridiculous lending practices will continue to be felt for some time to come.

(lawyer, Arizona, Tucson, attorney, foreclosure, real estate, “ninja loan”)

Arizona Tax Lien Foreclosure – Doing Your Due Diligence August 15, 2008

http://www.landandbiz.com

Once an investor has owned a tax lien certificate of purchase for at least three years since it was first offered for sale by the given county, the investor may seek to foreclose the right of the property owner to redeem the tax lien. Arizona’s statutes (A.R.S. Section 42-18201, et seq.) govern the foreclosure process.

Specifically, Arizona Revised Statute Section 42-18201 requires that at least thirty days before filing an action to foreclose the right to redeem, the tax lien holder must send a notice of intent to file a foreclosure to the property owner. Section 42-18201 specifies exactly how that is to be done.

The recent Arizona Court of Appeals case of Roberts v. Robert, 158 P.3d 899 (App. 2007), has added to the due diligence necessary to successfully foreclose the right of a property owner to redeem a tax lien. In Roberts, the Roberts purchased two tax liens for property located in Mohave County, Arizona. The Roberts later sued the owner of record, Phyllis V. Johnson, the Mohave County Treasurer, various fictitious parties, and the “unknown heirs of any of” them “if they be deceased” to foreclose their right to redeem the tax liens.

After attempting personal service on Johnson, the Roberts discovered that Johnson had died. A son of Johnson, was served on Johnson’s behalf and subsequently entered into an arrangement with the Roberts whereby they would obtain a default judgment without any subsequent assessment of fees or costs against Johnson or the son. The Roberts later obtained a default judgment barring Johnson or any person claiming title “under” her from asserting any right, title, or interest in an tot he property subject to the tax lien.

A year later, Tim Roberts appeared, claimed to be the son of and heir of Johnson, and argued that as an heir, he had a right to redeem the tax liens. He then moved for a new trial and asked the trial court to set aside the default judgment, arguing that the default judgment was void because he had not been personally served or served by publication.

The issue presented to the Court of Appeals was whether Johnson’s heir had a right to redeem a tax lien. The Court of Appeals ruled that because Tim Roberts was Johnson’s rightful heir, he a right to redeem. The Court also ruled that only those parties who are joined in a foreclosure action may have their rights to redeem foreclosed. Thus, ruled the Court, the Roberts need to join Tim Roberts as a defendant in their foreclosure action and obtain a judgment against him to foreclose his right to redeem.

The Court also set the standard for what level of due diligence and due process will be required in a tax lien foreclosure action in Arizona. Depending on the circumstances, the Court ruled that a tax lien holder may need to examine public records, or may need to ask relatives, friends, or the neighbors of the deceased property owner about the existence of heirs. In the end, the Court stated that whether service by publication is constitutionally sufficient will turn on the facts of the particular case, and it would not attempt to set forth a rule that will fit each circumstance.

This case clearly sets a due diligence and due process standard, but leaves it up to the circumstances of each case to dictate what efforts will justify service by publication. Indeed, the Court rejected the Roberts’ contention that they did serve Tim Roberts as an “unknown heir.” The Court stated that the record contained no evidence of what steps, if any, the Roberts took to identify and locate Johnson’s heirs before attempting service by publication.

The message is clear – if the property owner has died, some efforts must be made to locate the heirs of the deceased property owner before service by publication will be deemed appropriate under the circumstances. This decision clearly will place a heightened burden on tax lien investors and will undoubtedly increase the cost of successfully foreclosing the right to redeem. It will be interesting to see if future court decisions spell out in greater detail what level of due diligence and due process will be required. Until then, investors beware – do your due diligence.

(tax lien foreclosure Arizona Tucson attorney lawyer “tax liens” “tax lien”)

Affecting Title to Real Property – The “Lis Pendens” August 14, 2008

http://www.landandbiz.com

In cases involving real property, a plaintiff often will file what is called a “lis pendens,” which is Latin for suit pending. The purpose of filing a lis pendens is to secure a plaintiff’s claim on a property so that a sale, mortgage, or encumbrance of the property will not diminish the plaintiff’s rights to the property, should the plaintiff prevail in its case.

The practical effect of filing a lis pendens is to alert a potential purchaser of the property in dispute that the property’s title is in question, which obviously makes the property a whole lot less attractive to any potential buyer. In other words, once the lis pendens is recorded, it serves to place a cloud on the title to the property in question until the lawsuit is resolved and the notice is released or expunged. More importantly, the lis pendens has the effect of preventing most lenders and title companies from lending money on the security of land that is subject to a lis pendens.

Arizona’s lis pendens statute is found in Arizona Revised Statutes Section 12-1191(A), which states in part that in “an action affecting title to real property, the plaintiff at the time of filing the complaint, or thereafter, . . . may file in the office of the recorder of the county in which the property is situated a notice of the pendency of the action or defense.” A recent decision from the Arizona Court of Appeals in Sante Fe Ridge Homeowners’ Association v. Carla Bartschi discussed under what circumstances does an action affect title to real property.

In Sante Fe, the Sante Fe Homeowners’ Association filed a complaint against Carla Bartschi alleging breache of contract and sought injunctive relief for Bartschi’s alleged violations of the Association’s CC&R’s. Sante Fe alleged that Bartschi had failed to maintain the landscaping on her property. In conjunction with its lawsuit, Sante Fe filed a lis pendens against Bartschi’s property. Bartschi answered Sante Fe’s complaint and filed a counter claim for wrongful recordation of the lis pendens, and sought statutory damages , attorney’s fees, and costs under Arizona Revised Statutes Section 33-420(A). The trial court eventually granted Bartschi’s request for statutory damages, ruling that Sante Fe’s action did not affect title to real property and the lis pendens was prematurely recorded.

On appeal, the Arizona Court of Appeals ruled that Sante Fe’s action did not affect rights incident to title to real property. The court reasoned that a “lawsuit affects a right incident to title if any judgment would expand, restrict, or burden a property onwer’s rights as bestowed by virtue of that title.” The Court ruled that Sante Fe’s recordation of the lis pendens was premature because at the time it recorded the lis pendens no basis existed to conclude that a lien would be imposed on real property. If Sante Fe had obtained a lien against Bartschi, a basis may have existed to conclude that Sante Fe’s action affected title to real property.

As a practitioner, it is nice to have additional guidance from the courts on issues like these, but it is troubling to think how much Sante Fe was willing to pay to appeal the decision. I have to wonder if the Association members were aware of Sante Fe’s decision to appeal the trial court’s ruling, and whether they would have allowed the Board to authorize the appeal if they knew how much money the Association stood to lose if Sante Fe lost on appeal, which in large part they did.

(Arizona real estate land Fleishman property tax lien foreclosure)

Tax Lien Foreclosures and Bankruptcy August 7, 2008

http://www.landandbiz.com

Due diligence – do it and do it well. For unsuspecting tax lien investors who have not done their research, they might be surprised to learn that while property tax liens have very high priority, in certain circumstances, a bankruptcy can wreak havoc on their investment.

It should be noted that bankruptcy courts often respect property tax liens and give them high priority in the administration of a bankruptcy estate. However, under certain rare circumstances – Chapter 7 – the bankruptcy trustee may subordinate the tax lien to the administration of the estate, effectively extinguishing the tax lien. In effect, a tax lien investor could end up an unsecured creditor – a far cry from the 16% return or title to the property that investors believed they would receive.

This is a pretty rare situation, but one tax lien investors should be aware of.  In all instances, as part of a tax lien investors’ due diligence, they need to determine if the subject property is subject to an automatic stay by a bankruptcy court.  By consulting a title company, the county recorder, and the bankruptcy court, an investor can easily avoid such a scenario.

Arizona, tax lien, foreclosure, lawyer, attorney

Staving Off The Foreclosure Juggernaut July 26, 2008

http://www.landandbiz.com

RealtyTrac estimates that 1 in every 171 United States households were in the process of losing their home – up 121% on last year. To give some perspective on that number, RealtyTrac estimates that almost 740,000 United States homes entered the foreclosure process in the second quarter of 2008. That number includes receiving a default or bank repossession notice or warning of an impending auction. That is an incredible number for three months.

Not surprisingly, the worst hit areas were Nevada, California, Florida and Arizona, which had seen the biggest house price rises during the boom years, and the largest volume of sub-prime lending. Indeed, California had the most filings – 202,599 – which was up 198% from the same period a year ago.

CONGRESSIONAL RESPONSE

In response to the worsening foreclosure crisis and credit crunch, both the House and the Senante approved a housing bill – The American Housing Rescue and Foreclosure Prevention Act of 2008 – that will provide mortgage relief for 400,000 struggling homeowners. The housing plan is aimed in large part at calming the financial markets, which have been riding a roller coaster of late, due in no small part to concerns over the financial stability of Freddie Mac, Fannie Mae, and the banking industry as a whole.

THREATENED VETO

Despite an early veto threat, President Bush said he will sign the bill promptly. President Bush opposed the bill because he claimed that $3.9 billion in proposed neighborhood grants did nothing to help homeowners. President Bush had objected to the neighborhood grants, which would be for buying and fixing up foreclosed properties, saying that they were aimed at helping bankers and lenders, not homeowners who are in trouble.

OVERHAULING FHA

The bill headed for the President’s signature aims to spare an estimated 400,000 debt-strapped homeowners from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Authority (“FHA”). The FHA could insure $300 billion in such mortgages. However, banks would first have to agree to take a large loss on the existing loans in exchange for avoiding costly foreclosures.

The bill also seeks to overhaul FHA by requiring lenders to show how high a borrower’s payment could get under the terms of his mortgage. The bill also provides $180 million in pre-foreclosure counseling for struggling homeowners.

EASING THE CREDIT CRUNCH

The bill also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

The Treasury Department will also gain unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve will also more actively oversee the two mortgage giants.

OTHER PROVISIONS

The bill also includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009. The bill also allows people who don’t itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That chiefly benefits homeowners who have paid off their homes and can’t claim a deduction for mortgage interest.

Democratic leaders also tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt, which clearly irked many conservative Republicans. Those same Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Many argue that the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

The Congressional Budget Office (“CBO”) announced that the bailout plan could cost the government $25 billion over two years. Hard to argue that US taxpayers are not once again on the hook for a significant bailout. The difficult part in all this is to identify what the alternative is. All this “propping up” lenders and “calming” the markets gives one the feel that this is all a delicate house of cards just waiting to fall. We shall see.

(law, lawyer, attorney, Tucson)

Freddie and Fannie – “Daddy, we need your credit card!!” July 14, 2008

http://www.landandbiz.com

Looks like Freddie and Fannie needs Daddy’s credit card. With $5.3 TRILLION in combined mortgage debt (about 1/2 of the total mortgage debt in the United States), when Wall Street and the Feds begin to worry about Freddie and Fannie’s financial health, there is good reason to be concerned.

Freddie and Fannie are the MAJOR players in buying and guaranteeing loans in the secondary mortgage market. Well, last night the federal government moved on two fronts to shore up Freddie and Fannie and try an allay the markets before they open on Monday. First, the Treasury said it would provide additional liquidity as needed (Remember Bear Stearns?). Unlike the Bear Stearns melt-down however, Freddie and Fannie generally have not faced liquidity problems. But as their problems proliferate, there is always a danger that they might face funding difficulties, thus, the need for daddy’s credit card, just in case.

The feds also moved on another front – recapitalization. Freddie and Fannie are seriously undercapitalized. Freddie and Fannie are known as government sponsored enterprises (“GSE’s”). As GSE’s, Freddie and Fannie do not have to follow the same rules as others. Freddie Mac, for example, had about $16 billion in shareholder capital at the end of the last quarter, supporting $2.1 trillion in assets. Any real private financial sector institution operating with than kind of capitalization would be required to raise more money. But it seems that Freddie and Fannie don’t have to play by real rules because the government has their back. That is why Freddie and Fannie can exist in a world where all their assets are invested in the mortgage market – not the place to be right now, right?

Nonetheless, it is interesting to not that last week Fed Chairman Ben Bernanke and Henry Paulson, appearing before the House Financial Services Committee stated that the Office of Federal Housing Enterprise Oversight (Freddie and Fannie’s regulator), found both companies adequately capitalized. Indeed, Democrat Chris Dodd, the Senate Banking Committee Chairman also said that “Fannie and Freddie are in sound situation. They have more than adequate capital — in fact, more than the law requires. They have access to capital markets. They’re in good shape. The chairman of the Federal Reserve has said as much. The secretary of the Treasury as said as much.”

The only thing stopping Daddy (Treasury/Henry Paulson) from extending credit is Congress. While this situation reeks of a potential bailout, the silver lining in all this is that Fannie and Freddie not only have a rich daddy, they happen to be backed by pretty decent mortgages, not the subprimes that tanked many mortgage lenders. Still, their shares have been battered, down nearly 45% last week. The real purpose in all this is to assuage market fear. The feds don’t want market turmoil, otherwise, the house of cards comes tumbling down.

(arizona, land use, zoning, real estate, law, lawyer, attorney, tax, tax lien, tucson, business)

Mr. Foreclosure and the Copper Thieves July 10, 2008

A recent Reader’s Digest article highlighted Clint Medford, referred to by some as “Mr. Foreclosure.” While the foreclosure epidemic certainly has hit many homeowners and would-be investors hard, it has created a host of interesting opportunities for savvy investors and thieves alike.

Often a foreclosed home will sit empty for a time, which has invited a brand of looters who strip a home of its valuable materials. Indeed, as copper prices have sky-rocketed in recent years, desperate looters are stealing copper wires and pipes from foreclosed homes. Indeed, it has been reported that some owners of very expensive homes have stripped their own homes before foreclosure. This phenomenon is happening most prevalently in the Rust Belt states. Some estimate that the average home has over $1,000 in copper in it. Despite some recent legislative attempts to control the scrap metal market, thieves have successfully been able to find buyers for the stolen metal.

In those instances where a lender is sitting on a home that has sat for several months and no longer is inhabitable because of the destruction to the home, Medford steps in. He has created a network of banks that look to him to unload their rising stock of these uninhabitable homes. Medford has picked up houses for as little as a few thousand dollars. Rather than touch the hyper-inflated California markets, Medford focuses his purchases in the tough hit areas in the Rust Belt and places like Detroit, that has been especially hard hit.

Medford puts a little money into the house and turns around and sells it to investors looking for rental properties. Medford has a list of about 600 to 700 investors ready to purchase the homes he has picked up on the cheap from the banks. While selling to investors proved to be good business, Mr. Foreclosure has stepped into a completely new realm – mortgage lender.

For many in the foreclosure belt, many people may be able to afford some of the houses now for sale, but they can not get a mortgage. That is where Medford is stepping in. Rather than make the mistakes that many lenders were making during the rah-rah days of the hysterical real estate boom, Medford works with people by doing something unheard of – verifying their income. Hard to believe there was a time when people could get loans with NO income, just a credit score. The same buyers that obtained sub-prime loans and later faced foreclosure are the same people coming back to buy some of the homes that Medford has to offer. In other words, Medford is stepping in where the banks are all afraid to go right now.

Many question whether someone like Medford is a “foreclosure vulture” or someone willing to stop the forthcoming blight of neighborhoods hard hit by the foreclosure crisis. Sure Medford is charging 11 percent for a mortgage on a house he may have bought for a couple thousand dollars, but he is providing people an opportunity to get back into a house for less than they would be paying in rent in many places. That is a whole lot less shady than the other vultures who swoop in before a foreclosure only to grab someone’s title and equity because they can think of no other options. It sure is interesting out there though.

What happens to a tax lien in a foreclosure? June 30, 2008

http://www.landandbiz.com
(Fleishman Law, PLC)

A common question in the tax lien investing arena is what happens to a tax lien if a property is foreclosed on?

In a tax lien state like Arizona, counties do not sell property; rather they sell a tax lien in the form of a certificate of purchase for unpaid property taxes. This tax lien is an encumbrance or enforcement right held by the county. While the lien does not grant full ownership rights to the property, it does provide the investor with two commanding rights: 1) The right to receive interest penalty charges (up to 16%) if the lien is paid off by the delinquent property owner, and 2) The right to foreclose the tax lien and take title to the property if the lien is not paid.

What makes tax lien investing so potentially powerful is that property tax lien is a high priority lien, which is superior to judgment liens, mortgage liens, trust deeds, and other private liens. However, property tax liens do share priority with other liens. For example, in a Chapter 7 bankruptcy, the bankruptcy trustee may be permitted to pay the expenses of administering the bankrupt estate before paying the tax lien. Another example is when a bank fails due to insolvency. In that case, any loans owed to the bank are administered by the Federal Deposit Insurance Corporation (“FDIC”). This is a rare instance, but one any investor must be aware of.

The long and the short of tax liens in the foreclosure process is that the tax lien will be paid even if the property goes to a trustee’s sale because of its superior priority.

What’s With the Short Sale? June 23, 2008

Simply speaking, a short sale is when a bank or mortgage lender agrees to allow a homeowner to sell their home for less than the outstanding balance on the home. Lenders often only consider this option if it makes if the cost of a foreclosure is greater than the loss it will suffer as a result of the short sale. Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located. In other words, the lender wants to be assured that the homeowner truly is suffering financial hardship at the time the homeowner requests short sale relief.

As the foreclosure epidemic continues unabated, more and more people are considering the option of a short sale on their home to avoid foreclosure. While many real estate agents are touting this option as a way to avoid the impact on the homeowner’s credit, there are other consequences that any potential homeowner must consider as well.

First, in some states like Texas, even if the lender agrees to the short sale, it may be still come after the homeowner for the difference between the amount owed and the amount of the sale, even it approved the short sale. This is known as seeking a deficiency judgment. Indeed, some lenders may not tell a homeowner this until well down the line when the homeowner is less likely to back out. The key issue to consider is whether the loan is a “recourse” or “non-recourse” debt. If the debt is recourse, the lender can come back after the borrower, even if the short sale has been approved. If the debt is non-recourse, the lender’s only collateral is the property itself.

Fortunately for borrowers, Arizona has anti-deficiency statutes to protect against a lender going after a borrower for any deficiency.

The other major consideration in a short sale is the potential tax hit to the seller. As if they pressures of a potential foreclosure are not enough, the IRS may hit you for any forgiven debt. In other words, if the bank agrees to a short sale, any amount between what was owed on the mortgage and what the property sells for may be viewed as income by the IRS.

Mortgage Forgiveness Debt Relief Act of 2007

As the foreclosure crisis mounted, Congress and President Bush took action. The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage or foreclosure on a homeowner’s principal residence.

Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows an owner to exclude certain cancelled debt on his or her’s principal residence from income.

the Act applies only to forgiven or canceled debt used to buy, build or substantially improve the owner’s principal residence, or to refinance debt incurred for those purposes.

Rules for debt forgiveness:

1. The debt must have been discharged by the lender in 2007, 2008, or 2009.

2. The amount of debt that can be excluded is limited to $2 million.

3. The exclusion can be used only if the loan was taken out to acquire, build or substantially improve a principal residence. Forgiveness of debt on vacation homes, second homes and investment property doesn’t qualify. This is a huge exception given the number of speculative investment purchases that have helped fuel the foreclosure crisis.

4. Debt forgiven on a cash-out refinance or home equity loan must be apportioned between the amounts used for home acquisition, construction or improvement and amounts used for other purposes such as tuition, travel or repayment of other debts. Only the allowable portion qualifies for the tax break, says John W. Roth, a senior tax analyst at CCH, a provider of tax services, software and information in Riverwoods, Illinois.

So, if a lender accepts a short sale, and the borrower does not meet the exceptions above, again, the IRS normally views the discounted loan amount as income. For the real estate investor, the taxable income may be used to offset other income, but that is an issue best handled by a tax adviser.

In the end, while the short sale seems like a good option on first blush, any sale is discretionary the part of the lender and it will take a significant amount of time to consummate any transaction. Finally, a short sale can have tremendous tax implications to a seller. This is an issue I am not sure that real estate agents are in a good position to advise their clients of. Sellers need to understand there are several issues at play in a short sale, and jumping in without adequate advice can only add more trouble to an already difficult situation.

Fleishman Law’s Tax Lien Foreclosure Primer

Fleishman Law’s Tax Lien Foreclosure Primer

If you own a home and dutifully pay your mortgage each month, chances are, you do not worry much about whether your property taxes are being paid. Hopefully, if your mortgage servicer is doing its job correctly, you have an impound or escrow account set up from which your servicer pays your property taxes and insurance. However, some property owners do not have impound accounts; therefore, they are responsible for the payment of their property taxes.

So what happens when a property owner stops paying their property taxes? In Arizona, like many states, once a property owner is delinquent in the payment of their property taxes, county treasurers sell tax liens to investors in the form of certificates of purchase.

Each year, county treasurers hold tax lien sales. In Arizona, the tax lien sale is held each February. There, investors bid on an interest rate that they are willing to accept for the tax lien. In Arizona, the highest rate that an investor can receive is 16.00% for a tax lien. Often, if the tax lien has great interest, investors bid down the rate, which may reach as low as 5-6%. The investor is not bidding on the property, but the right to own a tax lien against that property. The tax lien process ensures that counties continue to receive property tax payments to support the services they provide, and it also provides investors a solid rate of return or the opportunity to foreclose on a property in time.

In the absence of any future payments by the property owner, a tax lien affords the investor the opportunity to make property tax payments in the place of the property owner. The tax lien holder also continues to receive the same interest rate originally bid until such time as the tax lien is redeemed by the property owner or a foreclosure action is instituted.

To begin a judicial tax lien foreclosure, an investor must hold a tax lien certificate of purchase for a minimum of three years from the date of the original offering of the tax lien. By the time an investor begins a judicial foreclosure in Arizona, for example, five years of back taxes will have accrued.

The judicial foreclosure process is controlled by state statutes and is very specific in its provisions. Given that a property owner may be stripped of his ownership rights to a property, notice is always an important part of the tax lien foreclosure process. In order to ensure that proper notice is given, purchasing a litigation guarantee from a title company is important to get the most up to date information on the property owners.

Arizona requires that a statutory notice letter be sent to the owner of record according to the records on file with the county recorder. Once notice is provided and no redemption has occurred, the investor can file an action in superior court seeking to foreclose the right of the property owner to redeem the tax lien. A property owner can redeem any tax lien up to moment before a judgment is signed. The typical tax lien foreclosure can take close to a year to complete.

Once a successful tax lien foreclosure is complete and a court enters judgment foreclosing the right of the owner to redeem the tax lien, the county treasurer will issue a treasurer’s deed, which is recorded and gives the investor title to the property.

It is interesting to note land ownership in this country is conditional. While ownership of property is a concept firmly enshrined by our founding fathers, governments at all levels still have tremendous power to take that property from owners. While eminent domain is the most commonly known power given to governments to take property, the tax lien process ensures that if you choose not to pay your property taxes, you invariably will lose your property to someone willing to step in and pay your back taxes for you.