Tag: excess tax sale funds

Excess Tax Sale Funds in Georgia: A Quick Review

Posted by Jeff on

In Georgia, properties can be auctioned if the owner fails to pay property taxes. When a property is sold at a tax sale for more than the amount owed in taxes, the remaining funds are considered excess funds. These funds are typically held by the county tax commissioner’s office or the sheriff. The Georgia statute that addresses excess tax sale funds is OCGA § 48-4-5.

How long do you have?

Excess funds will be maintained for five years from the date of sale under OCGA § 48-4-5(c) before being turned over to the Georgia Department of Revenue, Unclaimed Property Division.

Who is Entitled to Excess Funds?

Generally, those who may be entitled to claim excess funds include:

  • The property owner at the time of the tax sale: If the property owner can prove ownership and has not relinquished their rights, they may be entitled to the excess funds.
  • Lien holders: Mortgage companies or other lien holders with a recorded interest in the property at the time of the tax sale may also be entitled to claim the funds.
  • Other interested parties: In some cases, other parties with a legitimate interest in the property may be able to claim excess funds.

Excess tax sale funds are paid first to lienholders with a recorded interest on the day of the tax sale (in the order the interests were recorded) and then to the property owner at the time of the tax sale.

Claim Process

Claiming excess tax sale funds can be a bureaucratic and frustrating process. It involves providing documentation to prove ownership or interest in the property and filing a claim with the county tax commissioner’s office. The specific requirements and procedures vary by county.

Claiming excess tax sale funds can be challenging for several reasons:

  • Documentation requirements: Proving ownership or interest in a property can be difficult, especially if the property has changed hands multiple times or records are incomplete.
  • Bureaucratic hurdles: Like many government agencies or large corporations, filing a claim can be time-consuming and frustrating, with unnecessary bureaucratic obstacles.

If you are entitled to excess tax sale funds, here are some tips:

  • Act promptly: Research the time limits for filing claims in your county and act quickly.
  • Gather documentation: Collect relevant documents, such as deeds, mortgages, and property tax records.
  • Consult an attorney: An attorney can help you navigate the legal process and protect your rights.

Would you like to know more about a specific aspect of excess tax sale funds in Georgia, such as the time limits for filing claims or the documentation required? Please call us at 404-382-9994; we’ll happily answer any questions.  

Judicial In Rem Tax Sales

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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.

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.

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.

Another Georgia Excess Tax Sale Funds Case

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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.