Amid rising concerns over property tax debts in Ohio, institutional investors have been purchasing millions of dollars in delinquent taxes, a practice that has sparked debate across the state. This trend, which sees investors collecting up to 18% interest on liens, is now facing scrutiny from lawmakers and citizens alike, especially as post-pandemic tax bills have surged.
Ohio joined the ranks of about half the U.S. states in 1998 by legalizing the sale of delinquent tax debt. Recent data from county treasurers reveal that some of Ohio’s largest counties are setting records in these sales. For instance, Cuyahoga County offloaded $18 million in tax debt this June, marking an unprecedented high. Similarly, Franklin County saw sales double to $10 million last year, and counties like Hamilton and Warren are reporting peak sales for 2025 and 2026. Lucas County is even gearing up for its first sale since 2008.
The sale of tax lien certificates is seen as beneficial to investors, who gain the right to purchase subsequent liens when properties fall behind again, with a legally mandated 18% interest rate. In extreme situations, foreclosure is an option if the debt remains unpaid. County treasurers argue that these sales serve as a potent enforcement mechanism, often prompting property owners to resolve their debts or negotiate payment plans.
‘Profit from displacement’
While the system is designed to ensure tax compliance, its outcomes can be harsh. An illustrative case involves a 73-year-old widower in Ashtabula County who, despite paying $40,500 over a decade, still owed $21,600 on a debt that started at $21,000. This prompted the county treasurer to request debt forgiveness from Tax Ease Ohio, a creditor involved in the transaction.
Bipartisan efforts are now underway in Columbus to introduce legislation prohibiting such sales for residential and agricultural properties. Critics liken these debts to predatory loans due to their high-interest rates, which can trap homeowners in a cycle of debt with payments that greatly exceed the original amount. Mortgage lenders, too, have voiced concerns over the practice.
“Property owners should not be subject to a predatory lien sale without their consent,” said Daniel Broering, CEO of the People’s Bank Co., during discussions with state lawmakers. “It is a business model built around profit from displacement.”
Additionally, the issue has gained political traction with Amy Acton, a Democratic gubernatorial candidate, advocating for stricter controls on these sales, especially against “predatory” practices targeting vulnerable homeowners.
Record Sales of Delinquent Tax Debt
Despite the controversy, some counties continue to engage in significant tax lien sales. Cuyahoga County, for example, sold $18 million worth of debt to Nar Solutions, an Omaha-based lender, with certain consumer protections in place such as interest rate caps and exemptions for low-value properties or those in marginalized communities.
Franklin County recorded a $10 million sale of delinquent taxes last year, with an interest rate of 14%, while Hamilton and Warren counties also reported substantial sales. Summit County sold $4.5 million in tax debt last November to Adair Asset Management, with additional interest on subsequent sales.
Legislative Pushback and Concerns
State legislators like Democratic Rep. Dan Troy and GOP Rep. Dave Thomas are advocating for the elimination of lien certificate sales, criticizing the practice as outsourcing tax enforcement to distant corporations. Some banks have also highlighted the negative impact on mortgage investments, suggesting that they could better manage the debts if given the opportunity.
Stories of financial strain abound, with one borrower unaware of accumulating $26,500 in tax debts due to the separate handling of mortgage and tax payments. Such cases underscore the challenges and potential injustices associated with the system.
County Treasurers Defend the Practice
Despite the backlash, county treasurers defend the necessity of lien certificate sales, citing them as a last-resort method to recover funds meant for essential public services. They argue that these transactions often spur settlement of debts before liens are sold and incorporate consumer protections.
Without such sales, treasurers assert they would face limited options to recover lost revenue, which could impact funding for schools and emergency services. “There will be consequences for taxpayers when others stop paying because of a lost enforcement tool,” stated Stark County Treasurer Alex Zumbar.
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This story was originally published by Signal Ohio and distributed through a partnership with The Associated Press.
