Lender launches property-tax lien financing in Nevada

Most folks in Washoe County pay their property taxes on time, but a Texas company sees opportunity in those who account for the 2 percent of taxes that don’t get paid when they’re due.

Propel Financial Services LLC of San Antonio is rolling out a program that provides financing — not exactly a loan, but pretty close — to taxpayers who face a lien for nonpayment of their property taxes.

Nevada is the second state to authorize third-party financing of property taxes, following Texas. The Nevada Legislature last June approved a change in state law that allows third-party financing.

While the financing is available for residential as well as commercial properties, it’s drawn particularly strong interest from owners of commercial properties in Texas, says Jack Nelson, an attorney who’s the chief executive officer of Propel Financial Services.

Commercial-property investors, he says, turn to Propel’s property-tax financing to help manage cash flow.

The company provides five- and 10-year financing with monthly repayment to taxpayers owing at least $1,500.

It works like this: When taxes aren’t paid, the county places a tax lien on the property. After the customer strikes a deal with Propel, the company pays off the taxes, interest and penalties. The customer instructs the county treasurer to assign the lien to Propel, which holds it until the financing is repaid.

If the customer doesn’t pay Propel, the company can foreclose on the property to recover what it is owed and the costs it incurs in the foreclosure process. Nelson says Propel’s foreclosure rate runs just a bit higher than 0.2 percent.

While state law allows third-party tax-financing companies such as Propel to charge as much as 15 percent annual interest, Nelson says his company’s rates in Nevada so far have averaged 9.9 percent. The company anticipates that its rates will remain well below the 15 percent cap.

County governments in Nevada charge 10 percent annual interest on delinquent property taxes, along with a penalty that begins at 4 percent of the amount due and rises to 7 percent if the taxpayer misses multiple installments.

Interest on unpaid taxes (but not on penalty and fees) begins accruing roughly a year after tax bills go out.

Washoe County Treasurer Tammi Davis says about 98 percent of the property taxes owed to the county government are paid within the year that they are due.

While third-party financing such as the service provided by Propel provides one option for those who owe the other 2 percent, Davis says taxpayers need to examine all their available options.

“Sometimes, they can work it out without having added expense,” Davis says, adding, “By the time the property goes to sale, there are four years’ worth of delinquent taxes.” (The next tax sale in Washoe County is scheduled for 10 a.m. April 23.)

Bobby Finken, who once worked as the sales manager for Reno-based EP Minerals, heads Propel Financial’s sales efforts in Nevada.

While Propel currently is the only company providing third-party tax financing in Nevada, Nelson said the company expects that other competitors will arise.

But a requirement that companies in the business post a bond of at least $500,000 may discourage some competition, he says.