Lockport Union-Sun & Journal Online

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January 30, 2013

City will pay back spurned bidder

(Continued)

Lockport Union-Sun & Journal — Presently the treasurer can refuse to transfer auctioned property when the bidder is found to be tax-delinquent as of the day of the auction, has lost property to city tax foreclosure since 1990 or owns any property that, as of auction day, has outstanding housing violations.

Literally in capital letters, right above the space where a bidder has to print his name and sign his agreement to all the terms, the sale contract warns bidders that “upon such findings of delinquency, all monies deposited shall be retained by the City of Lockport as liquidated damages.”

Still, the city has fielded complaints from at least a half-dozen bidders in the 2012 auction to whom the treasurer’s office later refused to sell property, because the bidders were found to have violated a term of sale, according to Ottaviano. The would-be buyers lost between $5,000 and $6,000 apiece, the sum of a 20 percent down payment on an auction purchase and a 10 percent buyer’s premium for the auctioneer.

Treasurer Michael White defended his office’s practice of keeping bidders’ deposits when sales fall through, saying the city faces unexpected expenses as a result. When the second-highest bidder at auction declines to buy, or is disqualified, the city is left with real property to maintain and the extra cost of trying to sell it again.

In addition to the delinquency disqualifiers being put to bidders in writing, every year the auctioneer repeats them numerous times during the live auction.

White says as far as he’s concerned, rules are rules, and they should be enforced “uniformly” and as a matter of principle.

Delinquency provisions were developed to discourage purchases by tax scofflaws, flippers and milkers, that is, the sorts of people who buy up property to wring income out of it on as little investment as they can get away with.

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