Category: Real Estate Litigation

How to redeem a tax deed in Georgia

In Georgia, when real estate is sold at a tax sale, the taxpayer or any person having a right, title, interest in, or lien upon the property may buy it at any time within 12 months from the date of sale by paying the redemption price. The property may be redeemed at any time after the initial 12 months until the tax sale buyer forecloses (or terminates) the right to do so by giving proper notice.

To redeem a property following a tax sale, the redeeming party must pay the amount paid for the property at the tax sale, plus any taxes paid on the property by the purchaser after the sale for taxes, plus any special assessments on the property, plus a premium of 20 percent of the amount for the first year or fraction of a year which has elapsed between the date of the sale and the date on which the redemption payment is made and 10 percent for each year or fraction of a year thereafter.

After 12 months from the date of the tax sale, the purchaser can forever bar redemption of the property by giving notice to the delinquent taxpayer, the occupant, if any, and upon all persons having recorded any right, title, interest in, or lien on the property in the county where the land is located. The purchaser must write an original notice in accordance with Georgia law, and deliver this notice, together with a list of persons to be served, to the sheriff of the county in which the real estate is located. The notice must be delivered not less than 45 days before the date set in the notice for termination of the right of redemption.

Should a party seeking to redeem a property fail to assert its rights to redeem the property within the initial 12 month period or within the time allowed under the notice of right of foreclosure summarized above, the redeeming party’s interest in the property is forever cancelled.

Whether you’re buying a tax deed or seeking to redeem a tax deed, please call us to discuss your options.

Serving a Lawsuit in Georgia: Understanding the Sheriff’s Entry of Service Form

In Georgia, with some exceptions, the opposing party a/k/a the defendant must be “personally” served before a lawsuit can go forward. This means the lawsuit must be physically handed to the defendant. If the defendant is a corporation, service is made on the corporation’s registered agent. (Every corporation in Georgia is required to appoint a registered agent—this information can be found on the Georgia Secretary of State’s website.)

Service usually begins by providing the sheriff a copy of the complaint, summons, and sheriff’s entry of service form. Service by the sheriff typically takes two to three weeks, during which time a sheriff’s deputy will complete the form and mail it back to the filing party. What does this form mean? Below is the relevant part of the form and how we address the various types of service in our office:

If the “personal” box is completed (box # 1 above), almost always, the sheriff has handed the paperwork to the opposing party and service is complete. Now we can get to work on the case.

If the “notorious” box is checked (box # 2 above)  this means the sheriff has handed the paperwork to someone over 18 years old who lives the opposing party. Georgia law allows notorious service, but, in our experience, we should be cautious in these situations because notorious service is sometimes unreliable and can challenged. Fortunately, an answer is due from the opposing party 30 days after service. If service isn’t contested in the answer, we no longer need to worry about service. If service is contested in the answer and seems reasonable, we will discuss with you the merits of repeating service. Ultimately, getting proper service is important because if we don’t have proper service, any judgment we obtain might be overturned.

The “corporation” box  (box # 3 above) obviously applies to serving a corporation. If this is checked, generally, this ends up being successful service.

If the “better address” box is checked (box # 5 above)  this means the person living at the address provided has told the sheriff that opposing party has moved.

Finally, the dreaded “non-est” box  box # 5 above): this means the sheriff has gone to the address provided but was unable to serve the defendant. Most importantly, this means the lawsuit can’t continue. At this point, we need to determine if we have a good address for the opposing party. A defendant can be served at home, work, church, etc. If we are confident we have a good address despite the sheriff being unsuccessful, we recommend hiring a private process server. Unlike the sheriff, a private process server will work with us and has a much better chance of successfully serving the defendant. The cost for a private process server is about $100, but goes up depending on difficulty. If we aren’t confident that we have a good address, we recommend hiring an investigator to find a good address for the defendant. This is more expensive and will cost $250 and upwards.

If we still can’t find the defendant or believe the defendant is avoiding service, we’re entitled to ask the court to allow us to serve the opposing party by publication. We’ll address service by publication in a separate blog.

We hope this gives you a better idea regarding service of a lawsuit in Georgia. If you have any questions, please don’t hesitate to call us at 404-382-9994.

Foreclosure Confirmations: True Market Value Revisited

Conyers 138, LLC et al. v. ONH1, LLC, A17A0145, June 2, 2017, concerns the unique Georgia proceeding that allows foreclosures to be retroactively confirmed by petition in Superior Court. The purpose of a confirmation is to verify the property sold at foreclosure for the fair market value, thereby permitting the lender to sue the borrower to recover the difference between the loan amount and the amount at foreclosure. If the property sells for less than fair market value at the foreclosure, then the lender can’t pursue a deficiency claim against the borrower.

In Conyers 138, LLC, the lender’s appraiser testified the market value of the property was $2,510,000, but to arrive at the fair market value, he subtracted $765,000 for demolition because he contended the best use of the property was as raw, vacant land. The borrower argued that estimate of the demolition cost was inflated because the demolition company used a faulty methodology. The Court of Appeals rejected this argument, stating disputes such as which methodology to apply are factual disputes best evaluated and decided by the trial judge. “The trial judge is the judge of credibility of the witnesses and of the weights to be given to the evidence.” (citations and punctuation omitted).

Since there was some evidence presented that supported the trial court’s decision, the Court of Appeals refused to disturb the trial court’s ruling. The takeaway is that the trial court has a lot of leeway and that it’s an uphill battle to successfully appeal a trial court’s decision in a foreclosure confirmation proceeding.

In Georgia: What To Do When Your Tenant Files for Bankruptcy?

Over the years, we’ve learned that for landlords, time is money. A three-day delay to file an eviction can mean losing a month’s rent. Similarly, when a delinquent tenant files bankruptcy, this can cause a two or three month delay, during which time most tenants pay no rent. For a landlord, dealing with a non-paying tenant, and trying to navigate the rules and laws of bankruptcy court, is a challenge. To make things worse, this is not an easy area of law, even for practicing bankruptcy lawyers.  “Executory contracts” have been described as the most “psychedelic” law in bankruptcy. Jay Lawrence Westbrook, Article: A Functional Analysis of Executory Contracts, 74 Minn. L. Rev. 227, 228 (1989)

While there are many issues you can handle without a lawyer, this is one in which you are most likely best served by getting professional advice. This blog only scratches the surface. Please call us for a free consultation if you find yourself in this situation.

Examples of executory contracts are long-term purchase agreements; service contracts; settlement agreements; insurance contracts; employment contracts; and construction contracts. When a party to an executory contract files a bankruptcy, an “automatic stay” of all collection and enforcement proceedings goes into effect at the time of filing. The automatic stay prevents eviction proceedings or other legal action – either for possession or for money damages. As a general rule, if this happens, approval from the bankruptcy court is required to proceed in the underlying action. This means moving for relief from stay. But sometimes filing a motion for relief from stay is unnecessary.

Section 365 is the place in the bankruptcy code that provides guidance on these issues. The rationale behind section 365 is to give the debtor and/or the trustee ample opportunity to decide which prepetition contracts and unexpired leases are beneficial to the bankruptcy estate and should be assumed and retained or assigned, and which are detrimental and should be rejected. Different executory contracts and unexpired leases receive different treatment and are subject to different requirements under section 365.

1. Unexpired Residential Real Property Leases and Unexpired Personal Property Leases in Chapter 7: Under section 365(d)(1), if the trustee does not assume or reject an executory contract or lease within 60 days after the order for relief (or within such additional time as the court may fix for cause), then the contract or lease is deemed rejected. This can be helpful to a landlord, especially if the 60 days is approaching.

2. Unexpired Residential Real Property Leases and Unexpired Personal Property Leases in Chapter 11 or 13: Under section 365(d)(2), executory contracts and unexpired residential real property and personal property leases can be assumed or rejected prior to, and including, plan confirmation. However, 365(d)(2) provides that the nondebtor party may request the court to order the trustee of debtor-in-possession either accept or reject within a specified time period.

3. Unexpired Non-Residential Real Property Leases Sections 365(d)(3) and (d)(4) provide extensive protection for nondebtor parties to non-residential real property leases: Upon filing the petition (the original bankruptcy filing), the Code requires the debtor or the trustee in Chapter 7 cases to timely perform all obligations of the lease from that date until the lease is assumed or rejected. If the debtor or trustee fails in that duty, the landlord may seek relief from the automatic stay and proceed with its remedies, which include an action for possession of the premises. The trustee or debtor-in-possession cannot retain possession of the nonresidential real property without paying rent or incurring an administrative expense claim for the payment of rent in the amount called for under the lease that accrues after the order for relief. Section 365(d)(4) provides that if a lease of non-residential real property (where the debtor is the lessee) is not assumed by the earlier of (a) 120 days from the order of relief, or (b) the entry of the confirmation order – it is deemed rejected and the property must be immediately surrendered to the lessor.

Landlords’ Responsibility For Injured Third-Parties in Georgia

A recent Georgia Court of Appeals case examines the issue of a landlords’ liability for injuries to a third-party. The case, Forsh v. Williams, A12A2248 (3/20/2013), involved a non-tenant injured by a tenant’s dogs.

The injured party alleged the landlord was negligent and reckless in failing to adequately screen his tenants, failing to enter into an agreement whereby the tenants were prohibited from having and keeping vicious dogs, failing to adequately inspect the premises, and failing to comply with legal requirements under state and federal law for ownership of rental property. The injured party also alleged the landlord failed to keep the premises in repair – as required under OCGA § 44-7-14 – by not installing an appropriate gate on the deck from which the dogs escaped, and failing to install fencing in the yard after knowing of the presence the dogs.

Under Georgia law, to be liable for injuries to third-parties, out-of-possession landlords are responsible to third-parties for defective construction or for failure to keep the premises in repair.

OCGA § 44-7-14, entitled “Tort liability of landlord,” provides: “Having fully parted with possession and the right of possession, the landlord is not responsible to third persons for damages resulting from the negligence or illegal use of the premises by the tenant; provided, however, the landlord is responsible for damages arising from defective construction or for damages arising from the failure to keep the premises in repair.”

As long as landlord fixes defective construction and keeps the property in repair, presumably, the landlord is immune from claims from the third parties. The allegations referenced above, which include screening tenants and taking other proactive steps, go beyond a landlord’s responsibility in OCGA § 44-7-14.

So what did the court of appeals do? The court focused mostly on procedural issues, reversing the trial court and finding the landlord was not entitled to an outright dismissal at an early stage of the litigation. In favor of the landlord, the court ruled against the injured party on her claim under 42 USCS § 1437 et. seq., commonly referred to as Section 8. The injured party alleged landlord failed to comply with Housing Quality Standards requiring adequate infrastructure to keep the dogs confined either on the deck, in a suitable fence, or otherwise. The court of appeals found this federal statute couldn’t be a basis for liability, and an injured party’s claim is limited to OCGA § 44-7-14.

If you have any questions about Georgia landlord liability for injuries, please call us at 404-382-9994. We have twenty years of experience handling these cases.