Tag: tax sale

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

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.

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 Services For Owners of Tax Deeds

If you own a tax deed, we offer two services related to tax deeds: (1) barring the right of redemption and (2) quiet title.

(1) Barring right to redeem/Notice of Foreclosure of Right to Redeem. In Georgia, you are entitled to bar/foreclose the right to redeem any time after one year has passed from the tax sale. Barment notices need to be sent to the owner of the property at the time of the tax sale and to any other party that holds an interest in the property.  

We are normally willing to charge a fixed fee (depending on the circumstances of the tax deed) plus expenses. Expenses include title search (about $300), publication (about $150), sheriff’s service ($50/service), and certified mail ($6.80/envelope).

The average cost to foreclose/bar the right to redeem, including expenses, is approximately $1,500.

(2) Quiet Title Against All the World. This is done after the barment is complete in order to obtain marketable title. A quiet title involves filing a lawsuit in the Superior Court of the county where the property is located. On these, we charge attorney’s fees on an hourly basis. Normally, the attorney’s fees are about $2,500, but like any lawsuit, we can’t quote an exact amount because the time required varies from case to case. In a quiet title, the court will appoint a special master: a special master is a local attorney who reviews the case and gives a recommendation to the court regarding title. The special master will cost an additional 2,500 (this amount is approximate). Court costs are an additional $500 (filing fee is approximately $250 and service on each defendant is $50).

The total cost of a quiet title is about $5,000.