Suffolk home-auction residency rule ripped

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Suffolk County owns a boarded up ranch house in Mastic Beach with a two-car garage -- taken for unpaid taxes -- which has twice been put up for sale. Both times it's been on the auction block, it's been left unsold.

"It's just not working," Pamela Greene, Suffolk real estate director, said in a presentation to Suffolk lawmakers last week. Greene said the problem is the county law, passed in 2008, requiring purchasers of surplus county houses to live in those dwellings for a decade. More than half the houses with the homestead requirement fail to draw bidders, she said.

The county imposed the homestead restriction to block speculators from buying the distressed houses and turning them into slum rentals or unregulated sober homes. Dropping the requirement, backers say, would be a major setback.

"We've been trying to reverse the problem and this would only make it worse again," said Legis. Kate Browning (WF-Shirley).

But Greene said the glut of foreclosures has made county-owned houses -- sold "as is" and requiring a 20 percent down payment -- less desirable. In uncertain financial times, a 10-year requirement also is onerous for homeowners with growing families who want to move up, or who lose jobs and need to move. County sales contracts also include a clause that returns ownership to Suffolk if, before expiration of the 10-year period, a buyer sells to anyone but a family member or someone willing to live in the home for the remainder of the period. Greene says that provision makes getting mortgages more difficult.

The county also suffers financially when houses cannot be sold. Not only do they remain off the tax rolls, but Suffolk must continue to advance property-tax money to towns and villages, and school, library and fire districts. The county also must keep up the vacant houses, which often are boarded up and vandalized.

That Mastic Beach house, for instance, first was taken for delinquent taxes in 2002. It went on the auction block in 2008 with a minimum price of $140,000 and there were no bidders. In 2011, the starting price was lowered to $65,000 and still no one bid. The county's investment in items such as taxes and upkeep now totals $84,539, more than is likely to be recovered, officials said.

The proposal Greene and her boss, County Executive Steve Levy, are pushing would remove the homestead requirement on any house not sold in two successive auctions. The real estate department normally holds two auctions a year; the next is planned for October.

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If their proposal were adopted, six houses without a homestead requirement and nine others for which the residency rule would remain in place could be put up at the next auction, Greene said. In all, the county has 242 houses taken for unpaid taxes that are not ready for auction.

Legis. Ricardo Montano (D-Brentwood) suggested a compromise that would require buyers to live in the house for two years. Greene called the shortened span "much more palatable."

Levy aides have drafted a revised bill based on Montano's compromise, but are also circulating a petition to bring to the floor of the full legislature their original proposal, tabled in committee, so lawmakers can vote on some solution at Tuesday's meeting.

Browning opposes Montano's compromise. She said it would be better to hold auctions just for first-time home buyers or turn over habitable houses to towns who then could rehabilitate them. "That would be a great way to move houses faster and so the county would not sit on them so long," said Browning, adding, "We don't need to create any more uncontrolled sober homes or absentee landlords."

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