Sometimes, 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.
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: