No Vacancy D.C.'s sweep of empty houses finds a few that don't fit the bill.
Room for Improvement: Angie and Rob Stillwell say DCRA’s sweep on vacant houses left them with a tax mess.
(Darrow Montgomery)
Rob and Angie Stillwell were the type of first-time home buyers who wanted to get everything right. After an intense six-week search, they settled on a three-bedroom row house on 14th Street NE, for which they paid $452,000. They closed the deal last November and, not wanting any surprises, hopped on the Office of Tax and Revenue’s Web site to find out what their annual taxes would be. The site spit back a number: $3,800, which sounded about right.
They moved in and were enjoying their new house when they followed some advice from their Realtor and logged back in to check their taxes. This time the site spit out a new number: $12,000—and that was only for half the year.
What happened? Were the Stillwells sold a bad mortgage? Did the tax office low-ball them the first time around? No, it was just the Department of Consumer and Regulatory Affairs decided to get serious about vacant houses.
In August, the DCRA conducted an unprecedented sweep, putting about 3,200 houses on the vacant list, including the Stillwells’. By comparison, the total number of houses declared vacant in 2006 was 800.
“I appreciate their gusto in trying to enforce this law,” Rob Stillwell says. “But when you make a big mistake you should do something big to fix it.”
Once a property is identified as vacant, a higher rate kicks in: $5 for every $100 of assessed value—a rate the D.C. Council is considering doubling. Occupied houses, on the other hand, are taxed at 85 cents per $100. When DCRA came around, the Stillwells’ property was, indeed, vacant. The old owners had left; the Stillwells hadn’t yet bought the place.
By the time the new homeowners figured out the inflated tax bill had passed on to them, their mortgage company had already paid it and increased their payments by $2,000 a month.
Nick Majett, deputy director of DCRA and the head of the Vacant Property Unit, says “of course” the Stillwells never got notification of the reclassification of their home’s status. “The notice went to the former owner who was foreclosed upon. And they’re not going to respond. [Stillwell] wasn’t the record owner at the time it was surveyed.”
The DCRA’s public information officer, Michael Rupert, says his agency isn’t solely to blame. “The same company [the Stillwells’ mortgage company] that is paying those taxes out of the escrow is probably the one that should have done better title research,” he says.
DCRA’s renewed vigor on vacant houses has also hit investors trying to rehab “transition” properties. Phil Guire bought his “first little crackhouse” last June at 11th and D Streets NE.
Prior to his owning it, he says, police found someone using it as a base for a distribution operation. The alleged dealer told police he was taking care of his great aunt, who Guire says was in terrible shape by the time the police got her out.
Guire bought the house for $460,000 and started construction within six weeks. When he got a tax bill for almost $45,000, he wasn’t terribly alarmed. Guire has other properties in the District and has had to correct inaccuracies before. But this wasn’t a typo; Guire discovered the city had not only tagged his place as vacant, it backdated vacant-rate taxes from when the police raided it and boarded it up—three years before he bought it.
As with the Stillwells, Guire’s mortgage company, Wells Fargo, had already paid the bill, since, he says, “no alarms went off in their system that, hey, maybe we shouldn’t pay a bill that’s 20 times what it should be.” Guire went down to DCRA with every scrap of documentation he could find and the agency eventually accepted his exemption, but “at some point Wells Fargo will want their money back.”
Of the 3,200 properties listed as vacant during the sweep, DCRA says about half of their owners applied for an exemption; the great majority of them got it. “Those aren’t mistakes,” says Rupert. “Those are vacant properties, and they’re classified as vacant properties. But they’re exempt from the tax rate.” Exemptions are granted if people can, for example, prove they are actively trying to sell or rent a place, or if it’s under construction.
Majett insists a property is considered vacant only if it is no longer someone’s “place of abode” and if there’s “no intention of [anyone] ever returning.” Mail piling up, a lack of any blinds or curtains in the window, overgrown weeds—all are indications that a home’s gone vacant and can be taxed accordingly.
Every vacant property—even a $6 million mansion—is a “nuisance,” says Majett. Anything that goes wrong has to be attended to by the neighbors or the police: If someone enters without authorization, if the pipes burst, if rats find their way in—it’s a nuisance, he says.
But sometimes properties end up in probate when someone dies and the rest of the family struggles for a while over what to do. Sometimes it takes time, as was the case with the Stillwells, for a family to move in.
Regardless, “the onus is on the homeowner to prove that it’s not vacant,” says Ed Krauze of the Greater Capital Area Association of Realtors.
“If you’re keeping the house up, I don’t see what’s the problem,” he says.
Tell that to Jason and Crislyn Lumia, who were living in their Capitol Hill home for four years, receiving standard tax bills, when they got one for $33,000. Jason Lumia says his “jaw hit the floor.”
His mortgage company, too, had already kicked in money—about half of the bill—when he headed to the DCRA to straighten it out.
“Other than complete incompetence, I do not know why the house was tagged as vacant by DCRA,” he says. “It was vacant prior to us purchasing and rehabbing. But, again, we’ve been in the house for four years, so whichever way you look at it, there is absolutely no excuse whatsoever for this happening right now.”
Because of the error, the Lumias were not able to take their homestead deduction this year, and because they didn’t get that tax benefit, their yearly bill went up to $5,500—twice what they paid last year, says Jason Lumia. They’re contesting that assessment while dealing with a mortgage company that wants to offset what it’s already paid by increasing the couple’s escrow payment by $5,000 a month. In addition, the company wants the couple to put $15,000 back into the escrow account by June 1.
DCRA is in the process of fixing the error. “You’ve been to the DMV,” Jason Lumia says. “I’ll let you picture that.”
May. 23 - 29, 2008 (Vol. 28, #21)
Comments
12:06 am
While Krauze and Majett point out that it's the owner's responsibility to show a property is not vacant. It's also the responsibility of DCRA to fix incorrections in a timely fashion, rather than wait weeks or months. In my case, DCRA sent someone over to take pictures of working lights, gas and water over two months ago as proof that my house is not vacant. Unfortunately, it still is listed as such and my title company is still being told the correction will occur. I dread the first vacant tax 'correction'.
Unfortunately, the place was initially listed as vacant while a for-sale sign was in front and it was MRIS listed. Apparently, DCRA's definition of vacant doesn't follow what Majett says
10:34 am
My house has been listed as vacant for months, and we go down to DCRA about once a month to try to fix it, and the woman keeps pointing to an 18" stack of similar cases, a stack which never seems to dwindle . The real kicker is that there are 5 actually vacant houses on our block that are receiving the homestead deduction, i.e. they are listed as not vacant.
10:49 am
I'm caught up in this mess too. In a house that I've lived in since 1999 and then in January 2008 put it on the market for sale. Like Mike, I've been waiting TWO MONTHS now for resoution. Meanwhile I'm out $10K for no good reason. DC is apathetic to this injustice to law abiding homeowners.The District should be ASHAMED of themselves. I can only imagine how much longer that it will take to get my money back from the office of Tax and Revenue. Guess I should start looking for a lawyer.
2:08 pm
This is one of the reasons why D.C. should really stand for District of Calamity! This city's "un-civil" servants are a disgrace and embarassment and they're so proud of it.
10:46 am
We are shopping for a house now and have seem many places that have been on the market for long periods of time and may now be classified as "vacant." But we will not be buying any house that is listed at the higher tax rate, especially since I have no confidence in DCRA's ability to reclassify it in a timely fashion. If the rationale for this law was to speed the sale of vacant houses, it is in fact going to have the opposite effect, people aren't going to buy a house that is listed as vacant b/c of the good chance of facing higher tax bills for the first year or so. Good job DC govt!
2:39 pm
I am in this terrible mess too. I bought my home on August 2007 and move in right away, but before moving in the former owner was living in the property. According to the DC government an inspector declared my property vacant because there weren't any curtains. Well I don't use curtains and I don't have any plans to have them, I like sun light.
I mailed copy of my deed and some bills on April 14th, and I have been calling every week, exposing myself to a terrible costumer service, yet no "no decision has been made." As all homeowners summerge in this calamity my mortgage company has paid the tag, and has increase my monthly payments by 90% payments that I CAN"T make. Also I have contacted the secretary of my Ward representative, however they never called me back.
Mr. Fenty, what do you think about it? Are you doing something to fix this problem? DC is getting worse since you Sr. took charge of the city, and I am afraid we will go back to the 1990'.
I will vote this time but not for Mr. Fenty, we need a person that can take care of business and fire all the innept burocracy at the DC government.
10:21 am
Great article, and I am glad to see some motion on the issue from DC. Interestingly though, nothing is mentioned about derelict properties owned by the city. The Mrs. and I have been going after the inspectors office concerning the row house next door (petworth/columbia heights). It has been boarded up for over 12 years, the city owns it, and it's a hazzard. we have seen possums, stray cats, racoons, rats, mice etc etc. The back half of the house is rotting off, it floods, its a fire hazzard and still has furniture in it. The inspectors office is unresponsive. The city could have sold it during the boom in a contractors auction. The other house next door to us was renovated but has not been maintained nor occupied for four years. No word on that either. Wonder how many properties the city owns that fit the "abandoned" requirements set forth by the city. It would be nice to see the agencies live up to the same standards they impose on the tax payers.
11:51 am
Majett is simply a liar -- pure and simple. Our Georgetown house was one of the homes effected, and it was inhabited at the time. What really makes me angry the Majett and co giving us "exemptions." This means, oh, DCRA did not make a mistake, but we will be nice and let you off the hook.
NO, the house was occupied, they should reverse the decision, and Mayor Fenty should show that he mans to clean things up by firing a few people, Majett for starters.
And speaking of that, yes I called the Mayors office. Nothing, no answer not reply. Fenty is a waste of space. One the other hand Jack Evan's office did "take up the cudgels." Even so we are still waiting for the hopeless DCRA to send a refund to our mortgage company of $24,000 weeks after the so-called "exemption" was so kindly granted and still getting larger mortgage bills.
By the way, it is not a secret that what happened was "drive-by" evaluations. Every house being renovated is in danger. And what also anoys me is that the Majett cannot explain how it is that the geniuses who work for him do not bother to cross check DCRA's own permit records to discover that a house in being renovated.
Seriously though, the reporters on this story should confront the council and the mayor and mention Majett's mendacity in the process.
8:43 am
Yes typical DC goverment. I had the DC tax office file a lieu on my taxes for 2001 I was never notifed and if I had not done a creidt check on myself I would have never found it. The worst thing about it was that I NEVER lived in DC in 2001. They never checked any other records and assumed because I work for DC and lived in DC in 2000 I must have lived there in 2001 even though my paychecks all went to maryland. IT took over a year to fix the problem and it still appears on my credit. I will never again live in the district. not because I don't love the city I do, but the goverment offices here are run by morons. Good luck dealing with them