Auction FAQs for Municipalities
NHTDPA Company Basics
Q. What is NH Tax Deed & Property Auctions (“NHTDPA”)? And why should my municipality hire NHTDPA to conduct a sale of its tax deed acquired properties?
A. NHTDPA is an all-inclusive auction company that maximizes revenue for municipalities through a time-tested program of advertising, bidder solicitations, and professional auctioneering.
Unlike other auction companies, NHTDPA includes skilled legal support in addition to its auction services. This results in substantial resource savings to a municipality because it alleviates the need to engage town or city counsel for most legal services in connection with the tax deed auction.
Because NHTDPA provides comprehensive auction and legal services for the tax deed auction, the municipality and its staff are not burdened with conducting the sale of municipally owned properties. Other than providing property information and a venue to hold the auction (frequently the town or city hall), the municipality and its staff may devote their time and resources to other matters.
Q. What is the cost to the municipality for NHTDPA’s services?
A. For the vast majority of auctions, there is zero cost to the municipality. NHTDPA charges a 10% buyer’s premium on the auctioned property paid by the successful bidder. This premium pays for NHTDPA’s expenses and services, including costs associated with advertising, auctioning, and legal support.
Q. Who owns NHTDPA?
A. Rick Sager (Auctioneer License #6104) and his son, Weston Sager (Auctioneer License #6224), are NHTDPA’s founders and owners. Since 2013, they have conducted tax deed auctions for municipalities across New Hampshire.
In addition to being licensed and insured auctioneers, Rick and Weston are lawyers. Rick has over thirty years of experience in the fields of real estate and municipal law, and Weston possesses substantial experience in litigation and commercial law. Both currently practice at Sager & Smith, PLLC—a law firm in Ossipee, NH that focuses on real estate law, auction law, and municipal law.
With NHTDPA, the town or city can rest assured that the auction process will run as smoothly as possible.
NHTDPA’s All-Inclusive Legal and Auction Services
Q. What legal services are included when hiring NHTDPA?
A. NHTDPA contracts with Sager & Smith to provide legal services in connection with its tax deed auctions. Traditionally, Sager & Smith coordinates all closings for properties sold at NHTDPA auctions, and when necessary, files interpleaders to distribute “excess proceeds” to former owners and/or lienholders (see more below). Sager & Smith also answers legal questions associated with the auction for the municipality.
For legal issues that may arise outside of the normal course of an auction, the municipality may contract with Sager & Smith directly at a competitive hourly rate. However, this does not prevent the municipality from engaging town or city counsel if it so chooses.
Q. Are NHTDPA’s auction services comparable to other auction companies?
A. NHTDPA’s auctions are exceptionally well-attended and yield superior sale values. NHTDPA’s owners have decades of experience conducting auctions for New Hampshire municipalities. NHTDPA has cultivated a dedicated following of bidders interested in purchasing tax deeded real estate. When NHTDPA sends out an email notification of an upcoming auction, each recipient is interested in bidding specifically at a tax deed property auction—not auctions in general.
With NHTDPA, you get the best of both worlds: premier auction services and first-rate legal support—all at no cost to your municipality.
Q. What advertising does NHTDPA do?
A. NHTDPA provides comprehensive advertising services, including (among other things):
- signage on each property to be auctioned,
- advertisements in the newspaper of general circulation in the municipality,
- signage in the town/city hall,
- detailed information for each property posted on this website,
- cross-listings on third-party auction websites,
- notifications of the auction to each property’s abutters, and
- alerts to our extensive and exclusive email list comprised of persons who regularly attend and bid at our auctions.
Q. Will NHTDPA travel to my municipality?
A. Yes. NHTDPA is a state-wide service and will travel to your municipality whenever necessary. NHTDPA typically holds the auction in the municipality where the properties are being sold.
NHTDPA’s Advantages Over Auction-Only Companies
Q. Are there cost savings when hiring NHTDPA over an auction-only company?
A. Yes. By hiring NHTDPA, your municipality may save thousands in legal costs and fees over an auction-only company.
Under RSA 80:88 and 80:90, legal costs incurred by the municipality in connection with selling the property are recoverable in a tax deed sale. However, the municipality will recover its legal costs and fees associated with the auction and with the post-auction real estate closings only if the property sells at or above the amount owed to the municipality.
In practice, the amount owed to the municipality often meets or exceeds the value of the real estate—particularly for less desirable properties, properties that the municipality has held onto for a long time, and properties that require the purchaser to invest money to render them usable. For these properties, there may be no excess proceeds available to cover the legal costs and fees associated with the auction and with the post-auction real estate closings. This means that the municipality must pay these costs and fees out-of-pocket, reducing the overall recovery for the municipality and its taxpayers.
Unlike its competition, NHTDPA covers the legal costs and fees associated with the auction and with post-auction real estate closings—regardless of whether the sale of the property exceeds the amount owed to the municipality. This often results in thousands of dollars in savings for the municipality and its taxpayers.
Q. What about sales of property the municipality did not acquire through tax deeding? Does hiring NHTDPA also save money for the municipality and its taxpayers?
A. Yes. For properties that are not tax deeded, the municipality is usually entitled to receive the entirety of the sale proceeds—meaning that every dollar the municipality spends on legal costs and fees diminishes the overall recovery for the municipality and its taxpayers. With NHTDPA, the municipality will recover more from these sales because NHTDPA covers the legal costs and fees associated with the auction and with the post-auction real estate closings.
Q. Does hiring NHTDPA save time for municipal staff over auction-only companies?
A. Yes. When hiring an auction-only company, municipal staff must spend countless hours before and after the auction communicating with its legal counsel, preparing closing documents, and tracking down former owners and lienholders.
By contrast, NHTDPA includes legal support with its auctions, allowing municipal leadership and staff to devote more time to other matters. Additionally, unlike auction-only companies, legal pitfalls are regularly identified and resolved before the auction—potentially saving the municipality considerable time and money down the road.
Benefits of Auctions Versus Sealed Bids
Q. What about selling tax deed acquired properties by sealed bids? Are there benefits to selling these properties by auction instead?
A. Yes. In our experience, live public auctions generate considerably more revenue than sealed bids. Unlike sealed bid sales, it is not uncommon for particularly desirable properties to sell at prices at or above their assessed value at live auction.
The auction approach is well suited for real estate because many parcels will only have a handful of interested buyers. Further, real estate values are often hard to quantify because they depend largely on the unique characteristics of the property and fluctuating market forces. Non-real estate property, such as police cruisers or fire engines, are more conducive to sealed bid auctions because they often have more potential interested buyers and because their values are more clearly defined.
For real estate, a live auction—particularly one that is well advertised—makes it more likely that people who are truly interested in the property (such as abutters) will make a competitive bid. The sealed bid process doesn’t allow people to see what other people are bidding, depriving them of the opportunity to put forth a more competitive bid simply because they underestimated the value of the property at the outset. This results in lower revenues for the municipality and often prevents the most deserving people from acquiring the property.
Finally, because a live auction is public and transparent, municipal leadership may avoid accusations of “insider dealing” that sometimes accompanies the sealed bid approach.
The Tax Deed Auction Process
Q. Is my municipality legally able to sell tax-deed-acquired properties?
A. Most municipalities are approved to sell tax-deed-acquired properties by virtue of such authority having been granted by an annual meeting. If your municipality hasn’t been so authorized, it will need to pass an article at an annual meeting or a special meeting.
Q. Can my municipality sell tax deed acquired properties without hiring an outside company?
A. Yes. However, municipalities often underestimate the amount of work and expertise required to properly conduct a tax deed auction.
Tax deed auctions are subject to numerous (and constantly changing) legal requirements. Extensive cross-platform advertising is critical to attract genuinely interested bidders on auction day. Without external auction and legal services, municipalities also must manage numerous post-auction tasks, such as issuing deeds, conducting closings, recording deeds, and filing paperwork required by the State of New Hampshire. Many of these can carry out-of-pocket costs for the municipality.
By hiring NHTDPA, the municipality does not have to worry about such tasks or costs because, unlike our competition, NHTDPA’s services are all-inclusive.
Q. How long does the entire sale process take?
A. The process typically takes 30-to-60 days from the date NHTDPA and the municipality sign the auction services agreement. If there are properties that have been held by the municipality for less than 3 years, the former owners need to receive a “90-day letter” advising the former owner of their right to redeem the property. This may postpone the auction date by a few months.
Q. How long does the live auction itself take?
A. This largely depends on the number and desirability of the properties to be sold. In our experience, each individual property is sold in about 2 or 3 minutes.
NHTDPA traditionally holds auctions on Saturday mornings to ensure the largest possible turnout. We generally set up beginning at 9:30 AM, register bidders beginning at 10:00 AM, conduct the auction beginning at 11:00 AM, and check out bidders thereafter. The entire process is usually completed and auction staff are off-premises by 12:30 PM. However, NHTDPA can hold an auction on any day and at any time.
Q. What if a bidder is unable to attend the live auction?
A. We allow a bidder to submit an absentee bid. One of NHTDPA’s staff will bid for the absentee bidder up to the limit of the bidder’s authority.
Q. What does a bidder need to bring to the auction?
A. Each bidder must provide a deposit (cash or check) to register to bid. The typical deposit is $1,000, but the deposit amount can be altered based upon the municipality’s input and depending upon the value of the properties to be auctioned. The high bidder is also required to pay 10% of the bid amount before leaving the auction if that percentage is greater than the deposit amount.
Q. When does the municipality receive its proceeds?
A. NHTDPA requires successful bidders to close on the property within 30 days of the auction date. The municipality receives its proceeds soon thereafter. The process is coordinated by the Sager & Smith law firm, which assures that the money is received and transferred swiftly and securely.
Distributing Excess Proceeds
Q. Does a municipality get to keep the excess proceeds if it holds onto a tax deeded property for at least 3 years before offering it for sale?
A. Pursuant to New Hampshire law, a former owner has 3 years after the municipality takes the property for nonpayment of taxes to redeem the property by paying past-due taxes and other fees. Under prior law, municipalities that held onto properties for more than 3 years were allowed to keep everything earned from the auction, including the “excess proceeds”—that is, the amount generated at the sale which exceeds what the former owner owed in back taxes, interest, costs, and penalties.
However, on April 24, 2020, the New Hampshire Supreme Court decided Polonsky v. Town of Bedford, which held that municipalities cannot keep excess proceeds because doing so violates the takings clause of the New Hampshire Constitution. Since that date, regardless of whether a municipality holds onto a property more than 3 years, it is required to pay all excess proceeds to the former owner (or, in some instances, the mortgage holders and lienholders).
Q. How does a municipality determine who should receive the excess proceeds?
A. If the former owner or owners can be easily located and provide the attorney with the proper paperwork, then excess proceeds may be distributed without court involvement.
If, however, the former owner or owners cannot be easily located, an interpleader action is brought in a New Hampshire Superior Court to determine who is entitled to the excess proceeds. In essence, it is a lawsuit that names the former owner (or owners) and all lienholders on the property. The court determines who should get the excess proceeds.
Unlike other auction companies, NHTDPA coordinates with Sager & Smith to locate the former owners and lienholders. If needed, interpleader actions are filed on behalf of the municipality through Sager & Smith. Typically, Sager & Smith’s fees and costs are covered by a portion of the excess proceeds.
Q. If my municipality is interested in hiring NHTDPA, what should I do?
A. Contact Rick, Weston, or their assistant—Karen Rines—at the information below. Rick, Weston, and Karen are all happy to discuss NHTDPA’s services and advantages in more detail via email, telephone, videoconference, or in-person meeting.
Their contact information is below: