TAX SALE PURCHASES IN GEORGIA: AFTER THE TAX SALE

Part 2 in the Georgia Tax Sale Series

You’ve purchased a property at the local county courthouse through a tax sale. 

Congratulations! You’ve officially made your investment.  But, now what?

In Georgia, the buyer of the tax deed does not immediately take possession of the property.  The former title holders of the real estate (the individual(s) or corporation that owned the property at the time of the tax sale), once properly notified, now have one year from the date of the sale to redeem the property from you.  This means that they must pay you, the new owner, what you paid for the property plus interest and penalties.  Currently, the interest rate for a Georgia tax lien is twenty percent (20%).  This means the former owner will have to pay you, the Buyer, what you paid at the tax sale (in full) plus 20% interest and any penalties.  It doesn’t matter when the payment occurs after the sale, even if it is the same day, the interest and penalties attach.  After the one-year mark, the interest rate increases by ten percent (10%).  This means from day one of year two, the amount for redemption will then be the auction price, plus thirty percent (30%) and from day one of year three, auction price, plus forty percent (40%), and so on.

Consideration:  Did you know that almost ninety percent of properties bought at tax sales in Georgia are redeemed within the first year?  Some are even redeemed the same day!  That’s a quick twenty percent return on your investment.

But what if they don’t redeem the property? What do you do then?

If you’re wanting to sell or utilize the property in any manner, you’re going to have to wait until that one year mark.  One year from the date of the sale, you can begin the process of foreclosing on the right of redemption.  This is a process of non-judicial foreclosure which is set out, with particularity, in the Georgia statutes.  Given the requirements and the potential pitfalls, it would be a good idea to contact an attorney’s office, like Turner Jones Legal, LLC, which is experienced with handling foreclosures on the right to redemption to make sure it is done correctly and nothing is missed.

Consideration:  In that first, or subsequent years, following the tax sale, there will be taxes due on the property.  You, as the owner of record, will be responsible for making sure those taxes are paid in full.  This amount is added to the amount due at the time of redemption and is also included for the calculation of appropriate interest amount.

The beginning of the procedure will require a title examination or abstract of the title of the property.  This search will examine the chain of title (or the chain of previous owners) to determine all parties holding an interest of record on the property.  This will include any previous owners with outstanding interests in the property, mortgage holders, lien holders, Homeowner or Property Owner’s Associations, easement holders (like utility companies or access holders), estates and their heirs and/or representatives, among others.  Any of these individuals have a right to notice of the foreclosure on the right to redemption because they also have the right to redeem the property from the tax sale buyer.  Using an attorney’s office will make sure all of these individuals are identified and properly notified and will remove the headache of you having to find those individuals and make sure the notice is compliant with Georgia’s requirements.

Consideration:  What about individuals that did not have any interest in the property on record through a deed or otherwise, but had been paying the taxes on the property?  Georgia currently holds that payment of the taxes itself, without a recorded interest of ownership, does not create a right to notice or the right to redeem the property.

Once those with interest on record are notified, the statutorily appropriate and required notice will be prepared and sent out on your behalf.  In addition, the attorney’s office will run the appropriate notice in the newspaper of the county of which the property is located as required by the statutes.  This will not only serve as notice to the people required to receive notice (as addressed above), but will also notify any individuals with any unrecorded interest such as creditors that failed to record their interest as well as tenants, unknown individuals, and people who were unable to be located.  This publication will run once a week for four weeks prior to the foreclosure on the right to redemption.

Individuals with an unrecorded interest, according to Georgia law, are not required to receive notice, and thus, a tax deed holder can successfully bar any right to redeem of those individuals without personally notifying them.  This is why a thorough title examination is of the utmost importance in preparing to foreclose on the right to redemption. 

Consideration:  Georgia courts have found that if a name and address of an interested party can be reasonably ascertained, notice by publication does not meet the requirements of due process (i.e., notice).  Reasonable efforts must be made and detailed records kept of all efforts made to locate anyone entitled to notice of the foreclosure of the right to redemption.  An attorney will know what that standard is and how to appropriately meet it.

During the notification period and prior to the bar date (or the date upon which the right to redemption will be officially foreclosed), your attorney may be contacted by the individuals wanting to redeem the property.  They will present the redemption price, and if the individuals choose to redeem, they will collect that payment.  Once payment is collected you will have ten (10) days to execute a quit-claim deed to the redeeming party and your attorney will record the deed and present your redemption monies in accordance with any retainer agreement you signed with them.

If the redemption price is not collected by the bar date, the attorney will prepare and record an affidavit citing all the relevant and required information and record the affidavit into the Superior Court Clerk’s Office in the county in which the property is located.

Consideration:  Many people once relied on title by prescription, or waiting a certain number of years after the tax sale to “own the property” without going through the foreclosure on the right to redemption process.  However, a Georgia Supreme Court Decision, [Blizzard v. Moniz, 271 Ga. 50, 518 S.E.2d 407 (1999)] has rendered "ripening by prescription" (O.C.G.A. 48-4-48) inapplicable to tax sale purchases in most cases. The Court determined that actual possession of the property is necessary for a tax deed to convey fee simple title to the property absent the process of barring or foreclosing the right of redemption.  It is important to remember that the worth of a tax title is subject to many factors and that all tax sales are administered under the doctrine of caveat emptor ["Let the buyer beware (or take care)"]; to ensure your rights you should consult a knowledgeable real estate firm, like Turner Jones Legal, LLC.  

While an attorney and this process certainly can come as an expense for you, it is well worth that investment to make sure your rights and investment are protected and the process is properly followed. In our next post in this series, we will cover the process of quiet title of your tax sale property.  If you are an individual in this category, stay tuned!

If you are considering purchasing or have purchased  a property at a tax sale in Georgia, or need to foreclose on the right to redemption, contact Turner Jones Legal, LLC to order a title examination or to discuss your next steps after the sale.  We’d love to help you plan and predict your first or next real estate investment.  Give us a call:  706-359-3332!