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What is a "Land Bank?"

Name: What is a "Land Bank?"
Uploaded: 2023-01-31T00:00:00.000Z
Duration: 8 min 23 s

Understanding the Vacant Property Crisis in Missouri

The Problem of Derelict Properties

Many towns and cities in Missouri face issues with derelict vacant properties, which create feelings of insecurity among neighbors and lower property values. This leads to a cycle of neighborhood decline.

A significant factor contributing to this problem is the county's property tax collection system, which requires urgent changes to prevent worsening conditions.

Joe and Jane's Dilemma

Joe and Jane discover a vacant house on their county's tax sale list but find it has been listed for years with back taxes exceeding its value. They realize that purchasing such properties often comes with title defects.

Title defects arise when previous owners are not properly notified about tax payments, leading to legal complications that require hiring a lawyer for resolution, costing time and money.

Proposed Solutions: Judicial Tax Sale System & Land Banking

To address these issues, a judicial tax sale system is proposed where court supervision ensures buyers acquire properties free from liens or title defects. This would protect property owners' rights effectively.

For properties that do not sell at auction due to high tax debt relative to their value, land banking offers a solution by holding titles of unsold properties without any baggage (tax debts or liens). This allows for easier management and marketing of these properties.

Community Engagement through Land Banks

Land banks can collaborate with municipalities and community members to repurpose abandoned properties into parks, small businesses, or affordable housing options for first-time buyers. This fosters community involvement in revitalization efforts.

With the new system in place, potential buyers like Joe and Jane can easily purchase clean titles without back taxes, allowing them to rehabilitate homes quickly while enabling local governments to collect taxes again on these revived properties.

Benefits of the New System

Implementing local land banks alongside a judicial tax sale system empowers Missouri cities to combat vacancy issues effectively while restoring wealth within neighborhoods. This legislation provides counties the opportunity for reforming their systems significantly.

Video description

Why are there so many vacant and abandoned properties in your neighborhood? Why doesn’t someone just buy them and fix them up? Two years ago, a coalition of partners sat down to discuss how to fix the growing problem of vacant and abandoned properties in some Missouri communities. Land Banks are a tool used by cities and counties to get abandoned, tax-delinquent property back to productive use. By moving vacant properties back to market, land banks help stabilize neighborhoods and maintain property values. Land banks are created at the local level (city or county) under procedures set out in state statutes. Typically, they are governed by a board of directors, including community members and people with real estate expertise. The board and land bank staff can respond to community goals for the abandoned properties in the land bank. Judicial tax foreclosure helps clear the title to the properties that end up in the land bank, making it easier to find buyers and get the properties back to use. Joining land banking with judicial tax foreclosure helps local governments clear title and zero out back tax debt— two of the key barriers to the redevelopment of abandoned properties.