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Foreclosing the Right of Redemption – Protecting Your Tax Sale Purchase

By Logan C. Stone

After leaving a non-judicial tax sale with a tax sale deed in hand, you might think you own the recently-purchased property outright. However, the law regarding tax sales is not that simple. Even after a tax sale, the defaulting owner still has the right to redeem the property from you. This article explains the necessary steps you need to take to protect your interest and ultimately bar the right of redemption.

What is a tax sale?

Local governments are funded by property taxes, thus when residents or property owners fail or otherwise refuse to pay state, county, or municipal taxes, county tax commissioners are tasked with collecting the unpaid taxes owed from individuals and businesses.

Occasionally, collection of delinquent taxes is accomplished through a process called a tax sale.

A tax sale can be either "judicial," meaning the sale process involves the court system, or "non-judicial," meaning the process operates outside of the court system. This article discusses the dynamics of a non-judicial tax sale.

Unlike other similar auction processes, the highest bidder at a tax sale must undertake a process to protect its interest in the property, and this process is called "foreclosing" or "barring" the right of redemption.

What is the right of redemption?

After real property is sold at a tax sale, the owner or any party having an interest in the property may "redeem" the property from the holder of the tax sale deed.

In order to exercise this "right of redemption", a party must pay the amount provided in O.C.G.A. § 48-4-42 at any time within 12 months from the date of sale or at any time after the sale until the right to redeem is foreclosed by the giving of the notice provided for in O.C.G.A. § 48-4-45.

O.C.G.A. § 48-4-42 provides that the amount to be paid for the redemption of property includes: (1) the amount paid for the property at the tax sale; (2) any property taxes paid by the purchaser; (3) any special assessments on the property; and (4) a premium of 20 percent of the amount for the first year or fraction of a year which has elapsed between tax sale and the date on which the redemption payment is made and an additional 10 percent for each year or fraction of a year thereafter.

If redemption is made more than 30 days after the notice provided for in O.C.G.A. § 48-4-45, the sheriff's cost in connection with serving the notice and the cost of publication of the notice, if any, shall be added.

Any tax sale made after July 1, 2016 shall include sums paid from the date of the tax sale to the date of redemption to a property owners' association, condominium association, or homeowners' association.

How do I bar or foreclose on the right of redemption?

Pursuant to O.C.G.A. § 48-4-45, after 12 months from the tax sale, the purchaser (or the purchaser's heirs, successors, or assigns) may terminate, foreclose, or forever bar the right to redeem the property subject to the tax sale by causing notice of such intent to be served upon (1) the defendant in the tax sale; (2) the occupant, if any, of the property; and (3) all persons who have any right, title, interest, or lien of record upon the property in the county in which the land is located.

If any of the people enumerated in (1)-(3) reside outside the county in which the property is located and the address of such person is reasonably ascertainable, notice must be sent to them by registered or certified mail, or statutory overnight delivery.

In addition to serving notice, the party seeking to foreclose the right of redemption must publish a notice in the county organ in which that property is located once a week for four consecutive weeks during the six-month period immediately prior to the week of the redemption deadline date specified in the notice.

The substance of the notices must be in substantially the same form as stated in O.C.G.A. § 48-4-46. The purchaser must deliver the notices and a list of persons as described in O.C.G.A. § 48-4-45 to the sheriff of the county in which the land is located not less than forty-five (45) days before the date set in each notice for the expiration of the right to redeem. Next, within fifteen (15) days after delivery to the sheriff, the sheriff shall serve a copy of the notice (personally or by deputy) upon each of the persons included on the list who reside in the county where the property is located. The sheriff shall make an entry of the service on the original copy of the notice. Leaving a copy of the notice at the residence of any person required to be served with such notice shall be a sufficient service of the notice. However, if the sheriff (or deputy) is unable to effect service upon a party listed, the party requesting that service be made must publish the notice once a week for two consecutive weeks in the county organ wherein that party resides.

Does barring or foreclosing a right of redemption pass clear title?

Generally, title to property bought at a tax sale is considered clouded. A clouded title can cause complications when a new owner attempts to sell or finance the property. Accordingly, undertaking a quiet title action (QTA) is advisable. A QTA simply seeks a court's declaration that the new owner owns the real property free and clear.

Logan C. Stone is an associate attorney with Flint, Connolly & Walker, LLP currently representing clients on various civil matters, property-related disputes, and associated litigation. The attorneys at Flint, Connolly & Walker, LLP have the experience and knowledge to protect your interests whether in an adverse or transactional setting.
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