When CRIM sells your property tax debt

It is the sale, by the Centro de Recaudación de Ingresos Municipales, of transferable delinquent tax debts to a private buyer. It is not your file being handed to a collection agency: it is the debt itself changing owner, with the fiscal lien included, and Article 7.183 gives the buyer the same rights and obligations CRIM would have. The Code governs the procedure in Articles 7.173 to 7.183, with two prior notices that are the part that matters most to whoever owes.

On the debtor’s side, Article 7.174 excludes four situations: taxpayers whose debt is under an administrative review, adjustment or litigation procedure of any kind; whose debt is pending or active under Article 7.070 on final agreements; taxpayers subject to a payment plan; and debts identified as being in bankruptcy. On the buyer’s side, Article 7.176 excludes anyone who owes any tax to the Government, municipalities, agencies or instrumentalities, and anyone appearing as owner of the properties subject to those debts — including any relative within the fourth degree of consanguinity or second of affinity — as well as anyone with control over the debtor legal entity.

• That CRIM publish its intent to sell in a newspaper of general circulation in Puerto Rico at least sixty (60) days before the date set for the sale (Article 7.177(a)).Verified against the official source
• That the publication contain the web address of the list with each property’s identification number, the owner’s name per CRIM records, the location, the amount of delinquent tax, the breakdown of interest and surcharges, and the warning that the sale will proceed if payment is not received within the following thirty (30) days (Article 7.177(a)).Verified against the official source
• That CRIM notify its intent to sell to the debtor taxpayer and to the owner of the property, if a different person, by letter sent by post to their last known address, not less than thirty (30) days before the planned sale date (Article 7.177(b)).Verified against the official source
• That the letter include the identification of the property subject to the fiscal lien, the amount of the debt with a breakdown of tax, interest, surcharges and penalties and the economic years, the warning that it will be sold if not paid within thirty days, and the warning of the buyer’s right to collect (Article 7.177(b)).Verified against the official source
• That the buyer notify the sale to the debtor taxpayer and to the property owner within thirty (30) days of the purchase date, by post and email to the last known address (Article 7.181).Verified against the official source
• That the buyer give CRIM a copy of those notices (Article 7.181).Verified against the official source
• That the buyer file with CRIM a sworn statement that they meet all eligibility criteria and all documents needed to prove it (Article 7.176(a)(3)).Verified against the official source

• The notice published in the newspaper of general circulation, with the web address of the list of properties whose debt is to be sold (Article 7.177(a)).
• The letter CRIM sends by post to the debtor taxpayer and the property owner before the sale (Article 7.177(b)).
• The Certificate of Sale of transferable delinquent tax debts CRIM gives the buyer, per property or debtor, on receiving payment (Article 7.180(a)).
• The buyer’s subsequent notice, with the date of sale, their name and address, the amount of the credit, the duty to pay it and their right to proceed to collect (Article 7.181).

1. 1

   Step 1: Sixty days in the paper, thirty by letter

   These are the two notices the Act requires before selling, and they go first because they are the window to prevent it. Article 7.177(a) says no transferable delinquent tax debt may be sold unless CRIM has notified its intent to sell by publication in a newspaper of general circulation in Puerto Rico, at least sixty days before the date set for the sale; and if CRIM chooses to receive bids or private negotiation offers, at least thirty days before the date set to present them. Subsection (b) adds the personal notice: CRIM may not sell without having notified the intent to the debtor taxpayer and to the owner of the property, if a different person, by letter sent by post to their last known address, not less than thirty days before the planned date.

2. 2

   Step 2: What each notice must say

   The newspaper one, under Article 7.177(a), shall contain the web address where CRIM keeps a list with the identification number of each property whose debt is to be sold, the owner’s name per CRIM records, the property’s location, the amount of delinquent tax, a breakdown of accrued interest and surcharges, and a warning that the sale will proceed unless payment is received within the thirty days following publication. It shall also state that the list is available at CRIM offices for public inspection. The letter, under subsection (b), shall include the identification of the property subject to the fiscal lien if applicable; the amount of the debts with a breakdown of tax, interest, surcharges and penalties and the economic years; the warning that if they are not paid within thirty days of sending, the sale will proceed; and the warning that the buyer will be entitled to collect, with the transaction-cost surcharge and the interest the Act itself sets.

3. 3

   Step 3: The lien goes with the debt, and beats everyone

   Article 7.173(a) is the key to the whole chapter. The sale of transferable delinquent tax debts that carried the tacit legal mortgage for property taxes at the time of sale shall entail the assignment of that lien in the buyer’s favour. That fiscal lien shall keep its tacit character and shall keep its preference for the buyer and their assigns over every other creditor, including CRIM, and over third-party acquirers, even where they recorded their rights at the Property Registry. The Act clarifies that including CRIM there does not mean CRIM obtains a second, separate lien.

4. 4

   Step 4: Five years as first lien

   Article 7.175 sets its term and its rank. The fiscal lien existing at the date of sale shall constitute the first lien on the property for five years from that date. And it adds the rule ordering what comes after: the real property tax for economic years later than those covered by that lien shall constitute a lien preferred over the lien existing at the date of sale. That is: the old goes first for five years, but the new that keeps accruing outranks it.

5. 5

   Step 5: Four debts CRIM may not sell

   Article 7.174 lists them, and the third is the one most people can use. CRIM may not sell tax debts involving taxpayers whose debt is under an administrative review, adjustment or litigation procedure of any kind; taxpayers whose debt is pending or active under Article 7.070 on final agreements; taxpayers subject to a payment plan; nor debts identified as being in bankruptcy. And it closes: in those cases, the buyer must return those accounts to CRIM if the taxpayers or the accounts themselves are classified under any of those situations.

6. 6

   Step 6: Who cannot buy your debt

   Article 7.176 sets two strong exclusions. No natural or legal person is eligible who owes any tax to the Government of Puerto Rico, to the municipalities, to their agencies or instrumentalities. And no one is eligible who appears as owner of the properties subject to those debts in CRIM’s files or at the Property Registry, including any relative within the fourth degree of consanguinity or second degree of affinity; nor anyone who has control, as defined by regulation, over the debtor legal entity. Anyone wishing to be declared eligible must file with CRIM a sworn statement that they meet all the criteria and all the documents needed to prove it.

7. 7

   Step 7: And what if it is sold to someone who could not buy

   Article 7.176(c) sets the sanction. Where any sale is made in breach of those provisions, the transferred tax credit shall revert to CRIM, with the buyer having no right to a refund of the amounts paid; and the buyer shall also return to CRIM any amount received from the taxpayer as payment. Subsection (b) further forbids the buyer from transferring or assigning those debts to the excluded persons, and requires them to represent in the sale contract that they do not plan to.

8. 8

   Step 8: The sale can be cancelled or postponed

   Article 7.178 says CRIM may cancel or postpone any proposed sale before the sale date, and shall be obliged to comply again with the Article 7.177 notice requirements before resuming it, unless the date was postponed by no more than ten days, in which case renewed notice is unnecessary. Article 7.179 adds that, unless cancelled or postponed, the sale may be continued or resumed from day to day, at CRIM’s discretion, with no new notices, until all the debts covered by those notices have been sold.

9. 9

   Step 9: The buyer has thirty days to tell you

   Article 7.181 imposes it. Within thirty days of the date the credit was purchased, the buyer shall notify that sale to the debtor taxpayers and to the owners of the properties the credits fall on, if different persons, as identified in CRIM’s files or at the Property Registry. Notice shall be by post and email to the last known address, and shall include the date of sale; the buyer’s name and address; the amount of the credit; the taxpayer’s or owner’s duty to pay it; the buyer’s right to proceed to collect under Articles 7.185 to 7.194; and any other information the buyer deems relevant. The buyer is obliged to give CRIM a copy of those notices.

10. 10

    Step 10: From when they can collect, and at what interest

    Article 7.183 sets it. The buyer shall have the same rights and obligations CRIM would have over those debts, unless the book provides otherwise. They may begin the enforcement procedure to demand payment after thirty days have passed from the expiry of the period granted in Article 7.181 to notify the sale, without the amount owed having been paid. And once the credits are enforceable, they shall keep accruing interest monthly in the buyer’s favour at ten per cent a year.

11. 11

    Step 11: On CRIM’s books the debt shows as satisfied

    Article 7.182(a) puts it this way: receipt of the sale price shall constitute CRIM’s collection of those transferable delinquent tax debts, and shall be reflected in its records or files as fully satisfied. It is worth reading carefully: satisfied on CRIM’s books does not mean forgiven. The debt exists, it changed owner, and the one collecting it now is the buyer.

12. 12

    Step 12: If you later overpay, the money is split

    Article 7.183(d) foresees it: if CRIM receives tax payments in excess of the sums needed to cover the tax imposed for fiscal years after the sale, CRIM shall remit those excess payments to the buyer, and any excess remaining after the transferred debt is satisfied shall be returned to the taxpayer.

13. 13

    Step 13: How and at what price they are sold

    Article 7.173 describes the mechanics. CRIM may sell the debts, covered by the fiscal lien or not, individually or grouped, by negotiation, by public auction, or in any other way it finds convenient. AAFAF and any of its subsidiaries are authorised, at their discretion, to buy debts from CRIM. CRIM and AAFAF set the sale-price criteria by regulation; the price may be at a discount or at a premium, and a percentage rate representing CRIM’s incurred costs may be added, or up to five per cent of the total amount of the debts to cover the transaction’s handling expenses, whichever is greater.

Before the Centro de Recaudación de Ingresos Municipales, CRIM, which publishes the notice, sends the prior letter, sells the debt and issues the Certificate of Sale, and at whose offices the list of properties whose debt is to be sold is available for public inspection. After the sale, the one who notifies and collects is the buyer, who must also give CRIM a copy of their notices. AAFAF sets buyer eligibility requirements by regulation, and it and its subsidiaries may also buy.

• Believing that if CRIM sold the debt you owe nothing: on its books it shows as satisfied, but the debt changed owner.
• Thinking the buyer is just another collection agency: Article 7.183 gives them the same rights CRIM would have.
• Ignoring the newspaper notice: it is what opens the thirty-day window to pay and stop the sale.
• Leaving an old address with CRIM: the prior letter goes to the last known address.
• Not checking the list: the publication must give the web address where CRIM keeps it, and the list is also at its offices.
• Assuming being on a payment plan changes nothing: Article 7.174 bars selling the debt of anyone subject to a payment plan.
• Forgetting the other three exclusions: review, adjustment or litigation of any kind; a final agreement under Article 7.070; and bankruptcy.
• Believing the lien weakens on sale: it stays tacit and preferential over every other creditor, including CRIM.
• Thinking the old lien rules forever: it is first lien for five years, and taxes for later years outrank it.
• Expecting the buyer to contact you at once: they have thirty days to notify, and may start collecting thirty days after that period expires.
• Forgetting the interest: once enforceable, the credit accrues interest monthly at ten per cent a year in the buyer’s favour.

These are the government pages this guide is based on.

• Municipios de Puerto Rico

  Municipios

  bvirtualogp.pr.gov