Tag: tax sale

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.

Who Gets Excess Tax Sale Funds in Georgia?

Revisiting a previous post, under Georgia law, a tax commissioner holds excess funds generated by a tax sale in a fiduciary capacity, and the disbursement of those funds is governed by OCGA § 48-4-5. But, after a tax sale, if there are any excess funds after paying taxes, costs, and all expenses of a sale, who gets these funds? The answer, generally, is that distribution of excess tax funds is based on the right to the funds at the time of the tax sale.

If there are excess tax funds, the officer selling the property shall give written notice of the 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. Such notice shall be sent by first-class mail within 30 days after the tax sale. The notice shall contain a description of 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 collected and held by the tax commissioner, tax collector, sheriff, or other officer. The notice shall state that the excess funds are available for distribution to the owner or owners as their interests appear in the order of priority in which their interests exist.

If there is a dispute regarding who is entitled to the excess tax funds, an interpleader is filed and the excess funds are 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.

Some issues that come up in regard to distribution of excess tax funds is whether a “super-lien” obtained via a redemption gives the redeeming party first priority on the excess funds. The answer is no because a super-lien applies places a lien on the property but not on the excess tax sale funds.

Another issue is when additional taxes come due after the tax sale—is the tax commissioner allowed to use the excess funds for taxes due after the tax sale? The answer is no because the tax deed purchaser is the party responsible for paying property taxes after the tax sale. The remedy for the tax purchaser is to add taxes paid to the redemption price.

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.

 

Georgia Tax Deed Purchasers Are Responsible for Paying Association Dues

Under Georgia law, a tax deed purchaser is obligated to pay homeowners’ association assessments that come due after the tax sale. See Croft v. Fairfield Plantation Property Owners Assn., 276 Ga. App. 311, 314 (2005). This includes the period before the purchaser can foreclose on the right of redemption. Georgia courts have held that a tax deed purchaser acquires sufficient title to trigger automatic membership in the association. The rationale is that assessments and fees paid to a homeowners’ associations benefit a tax deed purchaser.

The good news for tax deed holders is that Georgia courts allow tax deed holders to include condominium association assessments paid as part of the redemption price. Harvest Assets, LLC v. Northlake Manor Condo. Assn., 340 Ga. App. 237 (2017).