So, what should have happened here? Not this.
OK, ok, you're asking, what should have happened, not what shouldn't have happened. I can't say it's a totally unfair question. It probably would be worth thinking this through.
But overall, I don't really feel like I need to propose a new a system for collecting minuscule delinquent property tax bills that doesn't involve selling off massively valuable property at auction to point out that this is a really bad and completely unnecessary outcome. Guess that's so obvious to me that I just don't feel inclined to engage with the question.