Important Georgia Excess Tax Sale Funds Case: Home Equity Credit Series 2021 v. Patrick Labat

Facts

In a well-reasoned and clearly articulated opinion dated April 17, 2025, the Georgia Court of Appeals clarified the rights of parties claiming excess funds following a tax sale. In Home Equity Credit Series 2021 v. Patrick Labat, a tax sale held on February 1, 2022, generated $438,598.95 in excess funds. The property was later redeemed on behalf of the owner, Nelson, by mortgage servicer NewRez (acting through its agent, CoreLogic) for $528,000.

The Fulton County Sheriff subsequently filed an interpleader action to determine the rightful recipients of the excess funds. Claims were filed by: NewRez, seeking $276,763.71 to satisfy a mortgage payoff as servicer for Freddie Mac; Georgia Housing and Finance Authority (GHFA), claiming $6,833.22 based on a subordinate security deed; and Home Equity Credit, claiming entitlement to all remaining funds based on an assignment of rights from Nelson.

At a hearing,  trial court awarded: $276,763.71 to NewRez, $6,833.22 to GHFA, $151,014.46 to another lienholder, $3,987.56 to the Sheriff for costs. Home Equity Credit received nothing and appealed.

Key Legal Issue

The central legal question on appeal was whether holders of security deeds are entitled to excess tax sale funds under OCGA § 48-4-5, or whether their claims are limited to interests in real property only, and therefore excluded.

Home Equity Credit contended that NewRez and GHFA were ineligible to receive any excess funds as their interests were limited to real estate, not personal property. They relied primarily on two cases: DLT List, LLC v. MM7VEN, 301 Ga. 131 (2017), which held that excess tax sale funds are personal property and cannot be claimed by parties whose interests attach only to the real estate; and Jackson v. Wellington & Assoc., 389 F. Supp. 3d 1199 (N.D. Ga. 2019), where a federal court went further, suggesting that security deed holders are not entitled to such funds.

Court of Appeals Ruling

The Court distinguished Jackson as non-binding federal precedent and emphasized the plain language of OCGA § 48-4-5(a)-(b), which requires notice to “record owner[s] of each security deed” and directs the superior court to distribute excess funds “to the owner or owners as their interests appear.”

Additionally, citing OCGA § 44-14-60, the Court noted that holders of security deeds retain actual legal title and are considered “owners” under Georgia law. The Court therefore found that the Georgia Legislature clearly intended for such parties to receive excess funds in line with their lien priorities.

Conclusion

The Georgia Court of Appeals affirmed the trial court’s distribution of excess funds and held that security deed holders are eligible recipients under OCGA § 48-4-5. The Court declined to follow contrary federal authority and reaffirmed the rights of lienholders to claim excess funds based on their recorded interests.

Call Us

If you have questions, do not hesitate to call us at 404-382-9994.

Excess Tax Sale Funds in Georgia: A Quick Review

Property

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.  

Quiet Your Title Worries: Overview of Marketable Title in Georgia

Types of Property Tax

Owning property in Georgia is a dream for many, but title issues can turn that dream into a nightmare. If you’re facing a cloud on your title – a potential claim that could prevent you from selling or refinancing your property – a quiet title action can be the solution.

Marketable Title

Marketable title is a legal term that refers to a property title free from any claims or disputes that could reasonably be expected to affect its value or ownership. In essence, it’s a title that a prudent buyer would be willing to accept.

What is a Quiet Title Action?

A quiet title action is a lawsuit allowing you to clear up doubts about the property’s rightful owner. By filing a quiet title lawsuit, you’re asking the court to declare you the owner and “quiet” any challenges to your title.

Types of Quiet Title

There are two types in Georgia: (1) conventional and (2) against all the world. Conventional is used when you must cancel a particular deed that is clouding your title. Against all the world is used when unknown persons may own your property. An example of a conventional type is if someone filed a fraudulent deed against your property, while an example of an against the world type is if you find out the person who sold you your property did not have full title; if you can’t find that person, you must file a quiet title against all the world.

Why Would I Need a Quiet Title Action in Georgia?

You might need a quiet title action in Georgia for several reasons. Here are a few common ones:

  • Heir Property: If you inherited property and there are questions about the validity of the will or the rights of other heirs, a quiet title action can help solidify your ownership.
  • Boundary Disputes: Unsure exactly where your property line ends? A quiet title action can help establish the legal boundaries of your land.
  • Tax Sales: A quiet title action is normally needed to clear the title following a tax sale.
  • Errors in Public Records: Mistakes on deeds or other public records can create clouds on title. A quiet title action can correct these errors.
  • Fraudulent Deeds: If someone fraudulently (or unintentionally) records a deed that shows up in your chain of title (the deeds that show you own the property, a quiet title is needed.
  • Uncancelled Loans: If you use your property as collateral to get a loan (i.e., a mortgage), the lender places a security deed on your property. Once you pay off the loan, the lender is supposed to cancel the security deed. Sometimes, for various reasons, the lender fails to cancel the security deed. For example, if a lender goes out of business, there may be no one to cancel the security deed.
  • Gaps in Ownership: When you sell your property, an attorney may call you to say that there is a gap in your ownership. For example if A sells to B and B sells to C, but you got your property from D, you have a title problem problem becuase you need a deed from C.

The Benefits of a Quiet Title Action in Georgia

A successful quiet title action provides several benefits:

  • Peace of Mind: Knowing your title is clear lets you relax and enjoy your property.
  • Increases Property Value: Properties with marketable title are more valuable than those with title issues.
  • Marketability: Without a clear title, you will likely be unable to sell your property.
  • Loan Approval: A clear title is essential for loan approval if you want to refinance your property.

The Quiet Title Process in Georgia

  1. Consult with a Real Estate Attorney: An experienced attorney can advise you on whether a quiet title action is right for you and guide you through the process.
  2. File a Lawsuit: The attorney will file a petition with the Superior Court in the county where the property is located.
  3. Serve Notice: The court will require that all potential claimants be served with the lawsuit.
  4. Special Master Appointment: In a quiet title against all the world, and sometimes in a conventional quiet title, the court will appoint a special master to investigate the claims and make recommendations.
  5. Court Hearing: The court or the special master will hold a hearing to determine property ownership.
  6. Judgment: The court will issue an order declaring the rightful owner. This order will then be filed on the county’s real estate records. Recording the court order gives you clear title.

Get Help With Your Quiet Title Action in Georgia

If you’re facing a cloud on your title in Georgia, don’t hesitate to seek help. We can advise you on your best course of action and ensure a smooth and successful quiet title process. Call us at 404-382-9994.

Judicial In Rem 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.

Tax Deed Redemption: Tricks of the Trade

Tax Deed Redemption Tricks of the Trade

Redemption Process

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.”

Redemption Dispute

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.

Don’t Wait Until the Last Minute – Call Us

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.

Call Us at 404-382-9991 to speak with an attorney regarding your options!

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

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

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.

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.