Category: Tax Sales

Judicial In Rem Tax Sales

Recently, we have seen more judicial tax sales in Georgia. This type of sale is much different than a non-judicial tax sale. OCGA § 48-4-75. Both the procedures and the deadlines differ.

When a taxpayer fails to property taxes, a county may file a judicial-in-rem tax sale. OCGA § 48-4-78. When the county employs this type of tax sale, it files a “Petition” in the superior court. The Petition is against the property itself and anyone with an interest in the property, including the owner.

Once the county files the Petition, the county gives notice to the interested parties. OCGA § 48-4-78. The county posts the property with copies of the summons and Petition, notice to interested parties, and notice of hearing. The county also sends the documents by regular and certified mail to all interested parties. Lastly, the county publishes a legal notice in the county newspaper alerting the public. The notice runs for two weeks).

Following notice, the court holds a hearing. Any interested party has the right to be heard and to contest the allegations in the Petition at the hearing. If the superior court determines that the information in the Petition is accurate and that the county gave proper notice, the court will order the county to sell the property at an auction. OCGA § 48-4-79.

The county then advertises the sale of the property in the county’s legal newspaper for four weeks. The advertisement will show the owner’s name, a description of the property to be sold, and the amount of the tax due OCGA §§ 9-13-140-142.

Before judicial tax sale auction, an interested party may redeem the property by paying the redemption amount to the county tax commissioner. If an interested party pays the redemption amount, the county dismisses the Petition. OCGA § 48-4-80.

One of the main differences between judicial and non-judicial tax sales is that a judicial tax sale allows only 60 days to redeem (buy back the property). In a non-judicial tax sale, the owner has at least one year to redeem. OCGA § 48-4-81.

The other major difference is judicial tax sales vest title absolutely into the purchaser. In theory, this eliminates the need for post-sale barment procedures and quiet title actions. There is little case law to provide guidance, but we expect the courts to consider these issues in the future.

Quiet Title

At Gomez & Golomb, we regularly file quiet title actions. Whether you’re trying to get marketable title following a tax sale or trying to clear up a clouded title, the following is a quick overview of the requirement to file a quiet title in Georgia:

(1) The filing party must own/hold title.

(2) There must be a cloud against the filing party’s title.

(3) For conventional quiet titles, the action must be filed in the Superior Court in the county where the adverse party lives. OCGA § 23-3-40.

(4) For quiet titles against all the world, the action must be filed in the Superior Court in the county where the land is located. OCGA § 23-3-60.

(5) The quiet title must be verified (signed under oath) by the filing party.

(6) The quiet title must include a description of the property, a description of the filing party’s interest in the property, any adverse claims on the property, a plat of survey, and a lis pendens.

(7) In a quiet title against all the world, the petition must be submitted to a special master, who examines the title, determines the interested parties, ensures the interested parties are served, holds a hearing, and issues recommendations to the court.

(8) All adverse parties who are known and whose residences are ascertainable by the sheriff or his deputy must be served; the filing party must make a diligent effort to identify and serve the adverse parties.

(9) Service by publication is permitted when the adverse party resides out of the state or if the residence is unknown.

If you have any questions, please call us at 404-392-9994.

Tax Deed Redemption: Tricks of the Trade

A new Georgia appellate case, Moxie Capital v. Delmont 21 (2021), has been released that every tax deed purchaser, investor, and property owner should know about. The case involves how to redeem a property following a tax sale.

OCGA § 48-4-40 says the property owner or an interest holder in the property may redeem a property following a tax sale. Redemption must occur within a twelve-month window and after a notice of right to redeem has been provided. OCGA § 48-4-42 states how much a redeeming party must pay to redeem. Importantly, the funds required to redeem “shall be paid in lawful money of the United States.”

In Moxie Capital, an investor attempted to redeem a property. For various reasons, the attempted redemption occurred on the last day of the redemption period. The investor contacted the tax deed holder for a payoff. There were conflicting versions of what happened from there. The investor said the tax deed holder did not cooperate; while the tax deed holder argued he had no obligation to cooperate.

What the parties don’t dispute is that the investor timely delivered a personal check to the tax deed holder. The investor claimed that certified funds were not available because the banks had closed by the time he found out the details of where to deliver the redemption amount. On the next day, the tax deed holder returned the personal check to the investor. And claimed that the investor’s right to redeem had expired.

Naturally, this went to court. While somewhat complicated, ultimately, the investor lost. And the tax deed purchaser got the property. The Georgia Court of Appeals ruled that to redeem, funds must be in the form of cash or certified check. The Court cited OCGA § 48-4-42, which says funds must be “paid in lawful money of the United States.” Although no Georgia court has clearly defined “lawful money,” the Georgia Court of Appeals reasoned that a personal check is a promise to pay. Thus, the Court of Appeals did not consider the investor’s personal check to be a payment.

The Court of Appeals also suggested that a tax deed purchaser has no obligation to act in “good faith” when responding to a party trying to redeem.

Moxie Capital is consistent with other Georgia cases that apply redemption statutes strictly. Some would say harshly. Whether you agree or disagree with the outcome will depend on which side of the ledger you’re on.

Regardless of if you are a tax deed purchaser or a homeowner, we will be glad to represent you to get you through the process safely.

TRANSFER OF TAX FIFA’S IN GEORGIA

Property taxes in Georgia are due towards the end of the year. For example, in Fulton County, 2021 taxes were due by November 15, 2021. When property taxes are not paid, the county’s taxing authority issues a fifa. A fifa acts as a lien against the property and is recorded on the county’s real estate records. The taxing authority must issue a 30-day notice to property owners before filing the fifa. The lien remains on the county’s public records until the taxpayer pays the taxes.

The most dramatic event that happens after filing a fifa is that the taxing authority may present the tax lien to the sheriff. The sheriff will use the fifa as a basis to auction the property to pay the taxes. This process is known as a tax sale.

To get taxes paid, taxing authorities in Georgia often sell their fifa’s to third-party investors. FIG and Investa are two companies that purchase tax liens.

For a taxpayer, a transfer of a tax fifa is confusing because the third party pays the county. The taxes are then owed to third-party, not the county. Thus, the county will show the taxes as paid, but the taxes are still owed.

Under Georgia law, OCGA § 48-3-19, the third-party purchasing the lien must send notice by first-class mail to the taxpayer within 60 days. In theory, this is to notify the taxpayer of whom to pay the taxes to. However, our office has had reports from taxpayers claiming they didn’t get any notice. Like the taxing authority, the third party can take the fifa to the sheriff and ask to auction the property to pay off the fifa.

If taxes are unpaid, you need to act as quickly as possible to pay the taxes to the correct party before there is a tax sale. Please call us at 404-382-9994 if you find yourself in this situation.

In Georgia, how long do you have to tender the statutory redemption amount following a tax sale and how much do you have to pay?

OCGA § 48-4-42 says: “The amount required to be paid for redemption of property from any sale for taxes . . . shall . . . be the amount paid for the property at the tax sale . . . 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.”

OCGA § 48-4-40 says the tax deed purchaser may terminate the right to redeem one year after the tax sale by sending out notices to any interested parties. The notice regarding the tax deed must include a deadline to redeem.  

It sounds simple enough, but what if the parties can’t agree on an amount? And what if a party redeems within the deadline by mistakenly pays less than the full redemption amount required under the statute? This situation arose in D&D Family Properties, LLC v. Wright, A20A1339 (November 3, 2020).

In Wright, the tax sale took place on July 5, 2017. The Court of Appeals found that the deadline starts running on the date of the tax sale. Thus, the deadline to redeem fell on July 4 of the following year. The redeeming party submitted $7,600 on July 5 ($6,000 for the amount paid at the tax sale plus the 20% premium). It did this thinking the one-year deadline ran on July 5. Or because July 4 was a holiday, the deadline rolled over to the next business day.

The Court of Appeals disagreed. It ruled that by July 5, the redeeming party owed an additional 10%. Thus, the $7,600 was inadequate, and the redeeming party could not redeem.

The takeaway is the Court of Appeals is willing to strictly enforce the statutes regarding tax sales.