Creditor who redeems obtains “super-lien”

super-lienSometimes, when a tax sale purchaser gives notice of the sale to another creditor which holds a lien, that creditor will pay off the tax sale purchaser, to avoid having their lien “wiped out” by barment.

What this does is take the tax sale purchaser our of the equation, and restores title to the property in the owner.

However, the creditor who redeems is said to then have a “super-lien” for the amount that they redeemed.

The Georgia Supreme Court has held:

If a creditor of the original taxpayer redeems the property, the amount paid by the redeeming creditor becomes a first lien on the property. The redeeming creditor then has first priority to repayment-a “super-lien” for the redemption price-and may proceed to foreclose against the property based upon that lien.

Nat’l Tax Funding, L.P. v. Harpagon Co., LLC, 277 Ga. 41, 42-43, 586 S.E.2d 235, 238 (2003) (emphasis added).

The redeeming creditor may satisfy some or all of the super-lien from any excess funds from the tax sale which are still being held by the Sheriff.  See Wester v. United Capital Fin. of Atlanta, LLC, 282 Ga. App. 392, 394, 638 S.E.2d 779, 781 (2006).

Or, the creditor can foreclose their super-lien, taking ownership from the owner, and wiping out other lien holders’ interests.  See Nat’l Tax Funding, L.P., supra.

An owner should not assume they will necessarily have 12 months in order to avoid losing their property.  A lien-creditor can redeem from the tax sale purchaser at any time, even 1 day after the tax sale, and then immediately seek to foreclose their super-lien.  The 12-month barment rules do not apply in this context.  Thus, in as little as 1-2 months, the owner might lose their property for good.

Therefore, it is important to respond promptly, and consult a competent tax sale attorney.

The full text of the Nat’l Tax Funding, L.P. v. Harpagon Co., LLC decision follows:
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Barment Notice by publication alone is generally insufficient

ID-100169240After purchasing property at a tax sale, the purchaser may seek to bar the owner from being able redeem the property.

Generally, the tax sale purchaser must send a written notice to the owner in the form provided by O.C.G.A. 48-4-46.

There is a provision for giving this written notice by “publication,” which means running an advertisement in the public notices section of the newspaper.

However, as a matter of fairness (and Constitutional due process), it is often not sufficient to rely solely upon publishing notices in a newspaper, because it is argued that such a notice is unlikely to actually inform the owner that their right to redeem is being barred.  This makes sense.  Do you know anyone who regularly reads the public notices section of a newspaper, with all of its tiny type?  Indeed, fewer and fewer people subscribe to a newspaper at all any more.

With regards to a barment notice specifically, the Georgia Supreme Court has held 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 S.E.2d 81, 83 (2003).  It is not necessary that actual notice be received by the owner, but such notice should be attempted using “reasonable diligence.” Id.

What is the “reasonable diligence” required in your case?  This will depend upon upon the situation, so it is advisable to consult a competent attorney to provide advice regarding your particular circumstances.

 

A full copy of this Court decision follows:
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Defective notice prior to tax sale does not void the sale or deed

house-gavel-300x198

Purchasers at tax sales are often worried about whether issues out of their control can negatively impact their investment.

For example, what if the owner claims that they received insufficient notice in advance of sale, or if proper notice simply cannot be proven later?

Generally speaking, the tax sale purchaser can rest easy on this issue.

The Georgia Supreme Court has held that “the rule in this state that defects in following the notice provisions of the tax sale statute may give an injured party a claim for damages, but will not render the tax sale or the deed therefrom void.”  Davis v. Harpagon Co., LLC, 281 Ga. 250, 252, 637 S.E.2d 1, 3 (2006).

Of course, every situation is unique, so you should consult an attorney about your case.

 

A full copy of this Court decision follows:
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Ga Court of Appeals Affirms Injunction Requiring Dock on Lake Lanier Be Moved To Permit Neighbor To Seek Dock Permit

The Georgia Court of Appeals, in the case of Dillon v. Reid, held that a Georgia trial court is not preempted from issuing an injunction to require a lot owner to move a dock, although the Corps of Engineers manages the shoreline of Lake Lanier and issues dock permits.

dock-jumpIn this case, Danny Reid sued his neighbors, Michael and Jennifer Dillon.  Reid wanted to seek a permit for a dock.  But, because his neighbors on the left and right (respectively, the Dillons, and the owner of Lot 10) had placed their docks too close together, Reid would not be eligible.  So Reid sued the Dillons, seeking an injunction requiring that the Dillons move their dock at least 132 feet away from the dock on Lot 10.  If an injunction did not issue quickly, then Reid would miss the window of opportunity to apply for a dock permit.

Judge Brenda L. Weaver

Judge Brenda L. Weaver

Forsyth Superior Court Judge Brenda S. Weaver held an evidentiary hearing, and found that the placement of the Dillons’ dock was in violation of an earlier Sale Agreement, found that Reid was a third party beneficiary of the Sale Agreement, and ordered that the Dillons move their dock.

 

The full text of the decision follows:

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Expiration of redemption period after tax sale will divest other tax liens

Why is it important to consult counsel regarding the effect of a tax sale or redemption period?  Because your interest or lien on the property may be divested if you do not act in a timely manner or follow the correct procedures.

This point was made clear through the recent decision by the Supreme Court of Georgia in the case of Karlen v. Reliance Equities LLC, Case No. S12A1056 (Ga. 9/10/2012).

Reliance Equities, LLC acquired title to a Property in an August 2009 tax saleThe redemption period then expired, and Reliance filed a quiet title action to establish that it had clear title.  The quiet title action was opposed by Nancy Karlen, who had purchased the 2001-2003 tax liens on the Property.

The Georgia Supreme Court held:

[W]ith respect to Karlen’s 2001-2003 tax liens, where, as here, the tax sale purchaser gives valid notice under the barment statutes and the competing tax lienholder allows the redemption period to mature and pass without taking any action, [her] lien is divested from the property and no longer encumbers the tax sale purchaser’s title interest. [] Accordingly, the trial court did not err in adopting the special master’s report and concluding that fee simple title had vested in Reliance.

 

Georgia real estate litigation attorney Jim Fletcher was not involved in this particular case, but he regularly represents parties in cases involving tax liens, tax sales, and redemption periods.  To discuss your case, contact us.

The full text of the decision follows: Read more

Reformation of deed may be required if defendant defaults

Occasionally a deed (including a deed to secure debt) does not reflect the parties’ true intent, and one of the parties will seek to have it ‘reformed’.  For example, the legal description attached to a deed may not be the ‘correct’ legal description.

In the case of Deutsche Bank Nat’l Trust Co. v. Hobbs, Case No. A12A1187 (Ga. App. Oct. 9, 2012), the Georgia Court of Appeals was faced with whether a plaintiff can become entitled to the relief of reformation if the defendant defaults (i.e. does not answer the lawsuit).  The Court held that the plaintiff did become so entitled because the defendant, in failing to answer, admitted that the security deed failed to include certain provisions due to a mistake, and therefore reformation was necessary in order to reflect the parties’ intent.  Accordingly, the Court of Appeals reversed the trial court’s denial of the plaintiff’s motion for default judgment.

Georgia real estate lawyer Jim Fletcher was not involved in this particular case, but he has litigated multiple cases regarding reformation of deeds.  To discuss your case, contact us.

The full text of the decision follows: Read more

Jim Named 2012 & 2013 “Rising Star” Among Attorneys in Atlanta Magazine by Super Lawyers

Jim was named a “Rising Star” among Georgia lawyers in Atlanta Magazine by Super Lawyers for 2012 and 2013.

Super Lawyers states that lawyers they have named “have attained a high-degree of peer recognition and professional achievement” and that no more than 2.5 percent of attorneys are named to the “Rising Stars” list.  Super Lawyers uses a multi-phase selection process, which includes independent research, peer nominations and peer evaluations.