Georgia Easement Disputes

For those interested in easements disputes, a new case from the Georgia Court of Appeals is worth reviewing. Patel Taherbhai, Inc. v. Broad Street Stockbridge, LLC, A19A0820 (October 3, 2019). This case involves adjoining landowners, Patel and Broad Street, who got into a dispute regarding an easement. The easement was on Patel’s property and allowed Broad Street to go over Patel’s property to reach a public street.

Broad Street complained that Patel was blocking access to the easement. After back and forth between the parties’ attorneys, Broad Street filed an ejectment lawsuit against Patel. The lawsuit alleged Patel had constructed improper and unsafe encroachments on the easement. These were denying Broad Street access and diminishing the value of its property. Therefore the encroachments should be removed. Patel denied the alleged encroachments were blocking access. And, even if access was being blocked, Broad Street had consented to the encroachments by failing to timely object.

The trial judge agreed with Broad Street and ordered the encroachments ejected (i.e., removed) from the easement. Broad Street appealed. The appellate court’s analysis focused on whether a party is entitled to file an ejectment lawsuit to remove an encroachment from an easement. In a well-reasoned decision, the appellate court determined that ejectment cannot be used in these situations. Instead, ejectment only applies when a party’s rightful possession to its property is being denied. Here, Patel’s alleged misconduct wasn’t occurring on Broad Street’s property (instead, it was occurring on Patel’s property) and therefore Patel wasn’t interfering with Broad’s Street’s possession of its property. This does not mean Patel is off the hook, only that the correct remedy is these cases is to file an action for damages and/or an injunction.

While many appellate decisions unfortunately provide little guidance, this thoughtful decision arrives at a ruling by carefully examining prior case law (going back to the 1800’s) and opinions expressed by real estate experts. In the end, lawyers (and landowners) now have a definitive understanding of how to handle situations in which an adjoining neighbor blocks an easement.

If you’re in a real estate dispute, please contact us for a free evaluation. Our number is (404) 382-9991.

TAX DEED LEGAL SERVICES: Helping You Secure Clear Ownership

If you’ve acquired property through a tax deed in Georgia, we offer two essential legal services designed to help you protect and perfect your ownership: (1) Foreclosure of the Right to Redeem and a (2) Quiet Title Action.

1. Foreclosure of the Right to Redeem

Overview

In Georgia, you are eligible to begin the process of foreclosing or barring the right to redeem the property one year after the tax sale. This legal step permanently terminates the rights of the prior owner and other interested parties to reclaim the property.

Notification Process

You must notify the individual who owned the property at the time of the tax sale, along with any other parties holding a legal interest. A full title search is required to identify these parties. Notice must be given both directly and through legal publication. After these steps, an affidavit of barment is filed with the court to finalize the process.

Our Fixed Fee

We typically charge a fixed fee of $3,250, which includes most standard out-of-pocket expenses. This covers the title search (approximately $350), publication (around $250), sheriff’s service (about $50 per service), and certified mailings (approximately $6.80 per envelope).

In cases where the prior owner is deceased, we must identify and locate all heirs, which may require additional time and cost. If this applies to your case, we will consult with you to assess the additional work required.

2. Quiet Title Action

Overview

After foreclosing the right to redeem, a quiet title action is often necessary to obtain full, marketable title. This process eliminates any remaining claims and allows you to sell, develop, or finance the property confidently.

Legal Procedure

A quiet title action is filed in the Superior Court of the county where the property is located. The court appoints a special master—an independent attorney—who reviews the case and submits a recommendation to the judge regarding the legitimacy of the title.

Fees and Estimated Costs

Our attorney’s fees for quiet title actions are billed at $400 per hour. In most cases, the legal work required amounts to approximately $2,500. The fee for the court-appointed special master is typically $2,500, and court costs—such as filing fees and service of process—are usually around $1,000.

Altogether, the total average cost of a quiet title action is approximately $6,000, depending on the complexity of the case.

Ready to Move Forward?

We’re here to help you through every step of the process—from initial notice to full title clearance. For a consultation or to begin service, please contact our office directly at 404-382-9994.

Another Georgia Excess Tax Sale Funds Case

Republic Title Co. v. Freeport Title & Guar., Inc., A19A0274 (May. 29, 2019) concerns entitlement to excess funds remaining following a tax sale pursuant to OCGA § 48-3-3. We’ve discussed this in previous blogs. There isn’t much new here but the case does reinforce some tax deed principles of interest. In this case, the property owner at the time of the tax sale sought to collect excess tax sale proceeds following the tax sale. Also following the tax sale, a security deed holder on the property similarly sought the excess tax funds.

The owner filed a lawsuit seeking the excess tax funds, and, in the same lawsuit, sought to quiet the security deed holder’s lien as a cloud on title. The argument was the loan had matured for more than seven years and therefore wasn’t enforceable at the time of the tax sale. In Georgia, under O.C.G.A. § 44-14-80, title to real property conveyed to secure a debt or debts revert to the grantor the expiration of seven years from the maturity of the debt or debts or the maturity of the last installment thereof as stated or fixed in the record of the conveyance (this is the general rule).

Following the recommendation issued by a special master appointed in the case, the trial court ruled in favor of the owner; awarding the owner the excess tax funds and quieting title against the security deed holder. The Georgia Court of Appeals agreed. The Georgia Court of Appeals rejected the security deed holder’s argument that the special master didn’t have authority to issue a ruling on excess funds. And the security deed holder’s argument that the property owner lacked standing to bring a quiet title was likewise disregarded. Although the quiet title was filed by the owner after the tax sale, it was filed within the time period in which the owner had a right to redeem the property. Thus, the owner’s right to redeem was enough to give the owner standing to quiet title against the security deed holder.

If you have any questions regarding tax deeds, please call us at 404-382-9994.

Does a Foreclosure Sale Determine Fair Market Value in Georgia?

The answer is a resounding yes according to an interesting case that came out recently. SeeDekalb County Board Of Tax Assessors v. Astor Atl, LLC, A19A0516 (April 1, 2019). In that case, the Georgia Court of Appeals rejected DeKalb County’s argument that it could assess property taxes in an amount higher than the price paid for the same property at a foreclosure sale.

Dekalb County argued that a foreclosure sale does not qualify under as an arm’s length, bona fide sale, and that it had appraised the property in conformity with its rules using the sales comparison approach.

In deciding the case, the Georgia Court of Appeals referenced O.C.G.A. § 48-5-2(3), which provides a limitation on the maximum allowable fair market value. Under that statute, “the transaction amount of the most recent arm’s length, bona fide sale in any year shall be the maximum allowable fair market value for the next taxable year.”

The decision concluded by holding that foreclosure sales can be arm’s length, bona fide sales. Moreover, the fact that the sale may not bring in the true market value of the property does not require a different rule; the fact that the sale results in a financial loss is not relevant.

The court noted that foreclosure sales are distinct from tax sales. While foreclosures are considered arm’s length, bona fide sales, tax sales are considered “forced sales” because owner retains a right of redemption, so the tax deed purchaser does not obtain proper title until the redemption period has run.

While this isn’t super helpful in the current market with surging property values, it would definitely help investors should the real estate market turn south down the road. Something to keep in mind.

Please call us at 404-382-9994 for real estate related questions.

Wrongful Eviction in Georgia

[We apologize, but our office no longer accepts tenant wrongful eviction claims. If you are a tenant, please contact Georgia Legal Aid at www.georgialegalaid.org or the Atlanta Volunteer Lawyers Foundation at https://avlf.org/get-help/evictions/.]

There is a lot of confusion regarding evicting a tenant and wrongful eviction. One question is the amount of damages a tenant is entitled to if wrongly evicted. The issue was addressed recently by the Georgia Court of Appeals in Hart v. Walker, 347 Ga. App. 582 (2018). In that case, the landlord wrongfully evicted the tenant by changing the locks when she and the tenant got into a dispute.

If you’re a landlord, please don’t do this—in almost all instances, a landlord in Georgia must file an eviction in court to deprive a tenant of possession. Georgia is not a self-help state.

In the Hart case, the tenant sued the landlord claiming wrongful eviction and damage to personal property. He also claimed out-of-pocket expenses. The trial court ruled that although the tenant was wrongfully evicted, the tenant wasn’t entitled to recover damages against the landlord. The appeals court agreed. At trial, the tenant’s expert testified to the fair market value of the items, but the tenant couldn’t convince the trial court that he owned the items in question. The appeals court explained that the trial court could consider the credibility of a witness and, if the witness isn’t credible, can reject the witness’ testimony. Here, the trial court didn’t believe the tenant that he owned the items in question. Regarding the tenant’s out-of-pocket expenses for food and a motel, the appeal court noted that the tenant would have to incur such expenses regardless of the wrongful eviction. Therefore, these damages were too remote.

While this case addressed damages, as a landlord, if there’s a takeaway from this blog, it is that changing the locks wrongfully evicting a tenant isn’t the way to go. The landlord, in this case, was fortunate that the tenant could not recover significant damages.

Tax Deed Titles in Georgia

If you’ve purchased a tax deed in Georgia, how do you obtain a clear tax deed title, i.e., marketable title? That’s a question we get frequently. First and foremost, following a tax sale, you need to bar the right of redemption of the owner who didn’t pay taxes and any party who holds an interest in the property. We have covered this topic in other blogs on this website. But what about after you’ve barred the right to redeem? Are you able to put up a for sale sign and sell the property?

Generally, the answer is no if there’s a non-judicial tax sale on the property within the past 20 years. In other words, most title insurance companies won’t title insure such properties. So what do you do? There are generally three ways to obtain full title or what is known as “marketable title.”

The first way is to adversely possess the property for more than four years. Adversely possessing means taking full possession of the property in a manner that is (i) hostile (against the right of the true owner and without permission); (ii) actual (exercising control over the property); (iii) exclusive; (iv) open and notorious (using the property as the real owner would, without hiding occupancy); and (v) continuous.

The second way is to get a quitclaim deed from the owner who didn’t pay taxes and any party with an interest in the property.

The third way is to file a quiet title action in the Superior Court where the property is located. In such a lawsuit, the owner who didn’t pay taxes and any party with an interest in the property are named and allowed to object. A special master is appointed and ultimately the cour will issue an order clearing title. The order is recorded on the public record and the process is complete.

Please call us with any questions regarding tax deeds or the above methods of obtaining marketable title.

Can a tax commissioner apply excess funds to post-tax sale property taxes?

Iglesia Del Dios Vivo Columna Y Apoyo De La Verdad La Luz Del Mundo, Inc. v. Downing, 321 Ga. App. 778 (2013) addressed this issue, and the answer, quite simply, is NO. (Bonus points for being able to say the plaintiff’s name in that case three times fast.)

The guiding statute is O.C.G.A. § 48-4-5, which provides that any excess funds existing “after paying taxes, costs, and all expenses of a sale made by the tax commissioner” shall be distributed “to the owner or owners as their interests appear in the order of priority in which their interests exist.”

So, while a tax commissioner is authorized to apply excess funds to satisfy outstanding property taxes owed by the delinquent taxpayer that accrued before the tax sale, it can’t do so after the tax sale. This reasoning for this is that the tax deed purchaser, not the delinquent taxpayer, is liable for post-tax sale property taxes.

What about a situation in which post-tax sale property taxes accrue before the tax deed purchaser has barred the right of redemption? In this situation, the delinquent taxpayer still has possession and the tax deed purchaser doesn’t have full title. Is the delinquent taxpayer jointly liable with the tax deed purchaser? According to the Downing case, the answer is no.  Only the tax deed purchaser is liable for post-tax sale property taxes; this is regardless of whether the right to redeem has been barred.

Service by Publication in a Quiet Title or Tax Deed Barment

In both a tax deed barment and the subsequent quiet title, a critical part of the procedure is serving all parties with an interest in the subject property. This includes lien holders, heirs, and anyone else with a claim against the property.

Often in these situations, especially when the property is distressed or abandoned, parties connected with the property may be hard to find. The best example is the delinquent taxpayer. That party has not paid taxes for one or more years, and, many times, has abandoned possession. If the delinquent taxpayer is gone and hasn’t left a forwarding address, that party may be anywhere.

What must be done in these situations? A reasonable and diligent search must be conducted to find and serve each party that has an interest. In a barment, this requires personal service for parties residing in the county of the tax sale or certified mail for parties residing outside the county. In a quiet title, personal service is required.

What if personal service or certified mail is unsuccessful? For example, you get back the certified letter stating it is undeliverable. In those situations, you’re entitled to serve by publication. This usually means advertising notice of the barment or lawsuit in the official county newspaper for four consecutive weeks.

Sound simple . . . usually it is  straightforward, but there are times when things don’t work out as expected. In a recent case, Dukes v. Munoz et al., A18A0572 (decided June 15, 2018), a tax deed holder, unable to serve the delinquent taxpayer, hired an investigator. The investigator came back saying the delinquent taxpayer could not be found after reasonable search. Relying on the investigator’s testimony, the tax deed holder barred the taxpayer’s right of redemption and filed a successful quiet title action.

Happy tax deed holder and end of story . . . not so much. Turns out that the delinquent taxpayer was a Georgia state legislator, who found out about the barment and quiet title. The Georgia Court of Appeals ruled that because a Google search would have provided the address for the delinquent taxpayer, the tax deed holder had not exercised proper diligence in locating the delinquent taxpayer. Therefore, service by publication was improper and the barment and quiet title were voided; the tax deed holder was forced to incur the expense of the barment and quiet title.

The takeaway is that it’s not sufficient to use the last known address of party if that address appears invalid. The best approach, in our opinion, is to spend a little extra money to make sure parties with an interest are served and given a proper opportunity to object.

Excess Tax Sale Funds in Georgia

Following up on a previous blog regarding whether redeeming parties get priority to claim excess tax sale funds (they don’t), this blog discusses the process of disbursing excess funds following a tax sale.

Under Georgia law, a tax commissioner holds excess funds generated by a tax sale in a fiduciary capacity. Alexander Investment Group v. Jarvis, 263 Ga. 489, 491-492 (1993). Georgia statutory law, in O.C.G.A. § 48-4-5, describes the process of disbursing excess tax sale funds.

If there are any excess funds after paying taxes, costs, and all expenses, within 30 days of the tax sale, written notice is sent by first-class U.S. Mail to the following parties: (1) the owner of the property (delinquent taxpayer), (2) security deed holder, and (3) parties with a properly recorded interest in the property.

The notice of excess tax funds shall describe the land sold, the date sold, the name and address of the tax sale purchaser, the total sale price, and the amount of excess funds. The notice shall also state that the excess funds are available for distribution to the owner or interest holders in the order of priority in which their interests exist on the public record.

If excess funds are unclaimed or a dispute arises regarding who’s entitled to the excess funds, the tax commissioner or sheriff is entitled to deposit the funds into the registry of the superior court so that the superior court can disburse the funds.

If the excess funds remain unclaimed for five years, the funds may be retained. After this time, only a court order from an interpleader action filed in the county where the tax sale occurred, by the claimant for the funds, shall serve as justification for release of the funds.

 

Langley: Important New Personal Injury Case

Langley v. MP Spring Lake, LLC, A18A0193 (May 1, 2018), just issued by the Georgia Court of Appeals, may have a big impact on many future Georgia personal injury cases. Langley involves a residential landlord-tenant relationship in which a tenant sued her landlord for injuries more than a year after the injuries occurred. Normally, in Georgia, an injured party has two years to file a personal injury lawsuit. However, in this case, the landlord moved to dismiss the case because the lease provided only one year to sue the landlord.  This is the exact language in the lease:

Limitation on Actions. To the extent allowed by law, Resident also agrees and understands that any legal action against Management or Owner must be instituted within one year of the date any claim or cause of action arises and that any action filed after one year from such date shall be time barred as a matter of law.

Focusing on the word any, the Court of Appeals ruled that any legal action included not only breach of contract claims but also personal injury claims. Thus, the lease trumped Georgia’s statute of limitations. The Court reasoned that parties should be free to enter into contracts without interference from the courts.

At Gomez & Golomb, we practice personal injury and real estate litigation. Thus, for us, Langley cuts both ways. It’s bad for our personal injury clients, but good for our real estate and corporate clients. From now on, in personal injury cases, we will be looking even more closely at applicable contracts for language that may limit injury claims. For our real estate and corporate clients, we will be advising them that Langley opens the door to include terms in their contracts that limit liability.