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Buyer beware: Hidden home fees can drain your bank account - KOAA.com | Continuous News | Colorado Springs and Pueblo

Buyer beware: Hidden home fees can drain your bank account

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Every year, hundreds of homeowners and investors purchase properties and homes for pennies on the dollar through tax lien auctions, but News 5 Investigates has learned there's a big risk involved that could end up costing you tens of thousands of dollars. 

George Turner turned to tax liens to build his savings. 

"I have purchased tax certificates for a number of years just as an investment because it pays good interest," he said. 

Tax liens pay 10-percent interest. 

When Turner saw a property on Main St. in Florence listed on a tax lien sale for $473, it seemed like a steal!

Worst case scenario: The property owner pays the delinquent taxes and Turner gets his $473 back with interest. 

Best case scenario: The property can become Turner's in as little as three years. 

Neither happened in this case. 

"When I got the notification to endorse the tax certificates, that's when I was told by the way there is an $18,000 water bill that has to be paid on the property," he said. 

Turner paid the $473 in taxes in November 2011. The following year, he was advised there was an additional $18,000 in water, sanitation and clean up costs for the property that was not disclosed by the Fremont County Treasurer's Office when he purchased the initial tax lien. 

He paid the $18,000 outstanding balance, but was in for another surprise. 

Turner was later asked to pay an additional $24,000 and $16,000 in outstanding fees in order to acquire the property. 

"The treasurer at the time said it was a buyer beware kind of deal," Turner said. "From a logical standpoint, there's just not time to do research on all of those properties to determine which ones you want to bid on and which ones you don't." 

At the time of the tax lien sale, there's no way for a potential buyer to know how many outstanding fees are associated with the property. That's because most water and sanitation districts in Fremont County don't report that information until December---the month after the county holds its annual tax lien sales. 

"We try to make it a simple process but it's not going to work out every time and we know that," Treasurer Kathy Elliot said. 

Elliot says while purchasing tax liens can be a good investment, there is risk involved. 

"It's buyer beware," she said. "There are liens out there that we don't know are coming in. Until they come in, we don't know. I can't tell entities that they can't certify taxes to us." 

However, News 5 Investigates discovered the county could change when it holds its auctions. 

According to state law, tax lien sales must occur on or before the second Monday in December each year. 

Elliot says the county has no plans to change its November auction date. 

"I would like to recover my money," Turner said. "I'd also like the law to change so that it's not legal to hide these charges from potential buyers." 

News 5 lead investigative reporter Eric Ross asked Elliot, "What's the lesson for buyers here? What do they need to do so they don't end up in a situation like Mr. Turner?" 

"Well for that property, something should have been looked at more by Mr. Turner or the City of Florence to see if they could have come to some type of agreement so the liens weren't so large," Elliot said. "I'm not sure though. I'm not trying to throw either of them under the bus." 

Turner lost out on the property and his $18,000 investment. 

If you plan on buying a property at a tax lien sale, here's what you need to know: 

*Ask the treasurer's office for a copy of all delinquent fees they have on file for the property prior to purchasing the lien

*Contact water and sanitation districts to see if they will voluntarily tell you about past due balances on the property

*Check tax assessment records online. Most counties post tax information and assessment values on its web site. 

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