Excess tax sale funds for judgment holders

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While we have discussed excess tax sale cases before, recently, the Georgia Court of Appeals addressed who may claim excess tax sale funds. In that case, the Court held that judgment holder was not an “interested” party and therefore not entitled to tax sale funds following a Fulton County tax sale.

Here, the claimant held a judgment (the ultimate litigant was a successor assignee of the judgment) against a lender who held a mortgage against the property. The judgment holder argued that following the tax sale, the excess tax sale funds became personal property belonging to the mortgage holder—and therefore (somehow) the mortgage holder is entitled to a lien against such personal property (i.e, the tax sale proceeds).

In analyzing these claims, the Court looked to O.C.G.A. § 48-4-5(a), which states:

[i]f there are any excess funds . . . the officer selling the property shall give written notice of such excess funds to the record owner of the property at the time of the tax sale and to the record owner of each security deed affecting the property and to all other parties having any recorded equity interest or claim in such property at the time of the tax sale.

The subsection that follows provides that “[s]uch excess funds shall be distributed by the superior court to the intended parties, including the owner, as their interests appear and in the order of priority in which their interests exist.” O.C.G.A. § 48-4-5(b).

Ultimately, this turned out to be an easy decision because the claimant simply did not have any interest in the property by virtue of holding a judgment against a party that may have had an interest. Specifically, because the judgment was against a corporate entity, and not the property that had been sold, and because the judgment lien was against a predecessor in interest to a grantee of a security deed, the claimant was not an “interested party” under OCGA § 48-4-5 and could not receive excess funds under the statute.

What is assumption of the risk and why is it important in a negligence case?

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Insurance companies and defendants use assumption of the risk, a legal doctrine, to try to deny injury claims. The doctrine holds that if a person is aware of a dangerous condition, they should not ignore the risk. The above sign is a clear cut example: if you walk on the rocks and are injured, you cannot blame the landowner.

Most would agree we should be responsible for the consequences of voluntarily participating in activities we know are risky. But what happens when a landowner puts up a sign on their property saying: “be careful where you step because we are not responsible for any injuries.” If you are injured on the property, can the owner rely on its warning?

In Georgia, assumption of risk applies when the person injured (1) had actual knowledge of the danger; (2) understood and appreciated the risks associated with such danger; and (3) voluntarily exposed himself to those risks. Daly v. Berryhill, S19G0499 (2020).

How is this decided? While each case has unique facts, a court will look at whether the evidence shows the person knew of the specific risk of harm associated with the activity that caused injury, yet proceeded anyway. If there is a warning sign, like the one above, you are going to lose. If there was a general warning or no warning, but using common sense might have disclosed the risk, then it is a closer question.

An example would be someone who goes skiing assumes the risk they will fall and break a bone. If this happens, they cannot sue the ski resort for such an injury. On the other hand, if the ski resort failed to properly maintain a path down the mountain, but had warned that the path might be dangerous, then successfully suing the ski resort depends on whether the skier was aware of the particular risk.

If you have an injury case that involves negligence and assumption of the risk, please call us so we can explain your options.  

How To Successfully Foreclose the Right to Redeem Following a Tax Sale

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Tyner v. Edge, which was decided by the Georgia Court of Appeals on May 22, 2020 (A20A0265), provides guidance on the process of foreclosing the right of redeem following a tax sale.

The court clarifies several aspects relating to properly barring the right to redeem:

(1) With regard to foreclosure of the right to redeem, Georgia law holds that a party who owns “any right, title, or interest in or lien” on the subject property is entitled to redeem (see O.C.G.A. § 48-4-40). Therefore, because of the word “any,” even a party with an unrecorded interest is entitled to redeem a property lost at a tax sale.

(2)  A party’s failure to record its interest does, however, have consequences because the holder of an unrecorded interest is not entitled to get a notice of foreclosure of the right to redeem. See OCGA § 48-4-45(a)(1)(c) and Freeman v. Eastern Sav. Bank, 271 Ga. 439, 440 (1) (520 SE2d 902) (1999). This means a tax deed holder can successfully bar the right to redeem without notifying persons or entities not in the chain of title. For this reason, a title search and careful examination of the title search is necessary in all cases.

(3) Regarding service by publication, the court confirmed that if the name and address of an interested party can be reasonably ascertained, notice of a tax sale by publication does not meet the requirements of due process. Hamilton v. Renewed Hope, Inc., 277 Ga. 465, 466 (589 SE2d 81) (2003). Consequently, tax deed holders must make a reasonable effort to locate all interested parties to successfully complete a barment, and cannot simply rely on publication.

(4) Payment of taxes, in and of itself, does not create an interest in property sufficient to trigger the notice requirements mentioned above. Thus, in this case, the party trying to redeem, who was not in the chain of title but had paid taxes, was not entitled to receive a barment notice.

Here, the tax deed owner won and the party trying to redeem lost. However, all parties who deal with tax deeds in Georgia can learn from this case. If you own a tax deed and need a lawyer, please call us at (404) 382-9994 to discuss barring the right to redeem for your tax deed.

The Actual Tax Sale in Georgia

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As a general rule, tax sales are held on the first Tuesday of the month. However, not every county has a tax sale every month. Generally, the tax sales are conducted between the hours of 10 am and 4 pm  on the steps of the county courthouse. If the first Tuesday of the month falls on a legal holiday, the sale is held the next day, Wednesday.

The opening bid for a particular property is the amount of tax due, plus penalties, interest, fi. fa. cost, levy cost, administrative levy fee, certified mail cost, advertising cost, and tax deed recording fees. The property is sold to the highest bidder.

Immediately following the conclusion of the tax sale all purchasers must pay in full the amount bid at the auction. Payment must be in the form of cash, certified check, or cashier’s check. Normally, the purchaser to sign a statement attesting to the fact that certain property was purchased for a certain price. After all payments are processed, the count will provide a Tax Deed and the Real Estate Transfer Tax form.

According to O.C.G.A. § 9-13-170, any person who becomes the purchaser of any real or personal property at any sale made at public outcry who fails or refuses to comply with the terms of the sale when requested to do so, shall be liable for the amount of the purchase money. It shall be the county’s option either to proceed against the purchaser for the full amount of the purchase money or to resell the real or personal property and then proceed against the first purchaser for any deficiency arising from the sale.

Investa Services of GA, LLC: Tax Sale Case

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Anyone who deals with excess tax sale funds or tax deeds in Georgia knows that Investa and/or affiliated entities play a significant role with regard to tax sales. Plaintiffs filed a class action against, among others, Investa. In this lawsuit, Investa was accused of improperly levying on tax executions for delinquent property taxes. The initial tax assessments were later reduced via a property tax appeal.

The trial court dismissed the lawsuit and Investa appealed. See B.C. Grand, LLC v. Investa Services of GA, LLC, A19A1297 (GA Ct of App, October 29, 2019). On appeal, the court ruled in favor of Investa et al., finding that B.C. Grand “failed to allege that the [Tax] Commissioner cancelled the tax executions or that they are void as a matter of law based on the post-issuance reduction in the tax assessment.” Because B.C. Grand failed to pay the taxes at issue while pursuing its appeal of the assessment. Instead, it waited to receive a refund (which it did receive), the full amounts owed remained valid. B.C. Grand also failed to plead the executions were void as a matter of law. So Investa was authorized to levy the executions at the full purchase price amount. Chalk one up for Investa.