All Forum Posts by: Denise Evans

You're welcome, @Jocelyn Bernstein

@Jocelyn Bernstein, if the John person (the earlier tax lien purchaser) transferred his rights to you, Sally, (the later tax lien purchaser) then you are good to go. Just make sure that transferr gets recorded with the tax assessor's office. No further action required on your part.

Under the newer (and county-optional) tax lien auction procedure, investors bid down the interest rate they are willing to accept if there is a redemption. Bidding starts at 12% per year. Currently an investor must own all of the outstanding tax liens since the first auction, and it must be four years since the first auction, before it can foreclose the liens to obtain the property.  That waiting time will probably be shortened in the future.

The winning bidder at the most recent auction has the right of first refusal to buy later years' liens at the same redemption rate.  What happens if John bought the 2020 lien at the 2021 auction, and Sally bought the 2021 through 2023 liens at each auction? Now, nobody has all of the liens. Nobody can foreclose.

The problem was fixed in the 2024 amendments. Suppose Sally exercises her right of first refusal at the 2025 auction to buy the 2024 lien, in the amount of $1,500. The county tax collection official will add to that purchase price the full redemption amount for John's 2020 lien. Let's suppose that number adds up to $2,220. That will be added to Sally's purchase price for a total due of $3,720.  The county will send John a check for $2,220. Sally will now own the 2020 lien, plus the later liens. At that point, Sally will own all of the liens and will be able to foreclose.

Not a lot of people know about the law change. If you are Sally, this is useful to you. If you are a third party and Sally is paralyzed, thinking she can't foreclose, you can buy her out and exercise her right of first refusal (and acquisition of the 2020 lien) and you can foreclose. If you are John, and the anchor preventing Sally from foreclosing, you might be able to buy her out cheaply if she doesn't know about the law change. Then you, John, can foreclose.

My pleasure, Micki!

@Micki Ray Harper  In a quiet title lawsuit, you are obligated try to find people who should be defendants. The complaint must describe the steps you took to find people who should be parties to the lawsuit. That is to basically keep you honest, so they judge can tell you tried. You are not obligated to be successful. 

At one time, I told people to spend money on a skip trace so they could file the in personam QT lawsuit (the one where you can served lawsuit papers on all defendants) and avoid the expense of the in rem QT lawsuit (the one where you need a GAL). But, today, most judges are requiring a GAL anyway. So, just give it your best self-help effort to find them, and then let the GAL do his or her job.

As far as an ejectment lawsuit, the real question is, was the property legally abandoned? If you took DIY possession, was it legally allowed because the property was abandoned, or was it illegally obtained and doesn't mean anything when it comes time to file a quiet title lawsuit.

If legally abandoned, that means the owner is gone, has no intention of coming back and no intention of ever doing anything with the property. The question is, what is the intention  of the owner, not what would a reasonable person think is the intention of the owner. That's hard to figure out sometime. The safest thing is to file an ejectment lawsuit. But, if you can find the owner to serve ejectment lawsuit papers on him, you can't get an ejectment order. So, that was a waste of time and money, right? All you can do then is just assume it is abandoned, take the risk, and take DIY possession like your Dad did.  Some lawyers will file ejectment lawsuits and ask for service by publication, but that is not allowed under the rules. Judges will sign off on it, but any judgment obtained by a method of service that is not allowed is void. So, all that time and money and really you are not better off than if you took DIY possession. Of course, that's only when you truly cannot find the owner.

If you can't find them to serve lawsuit papers on them, that is what the guardian ad litem and the newspaper notices are for. Don't worry about it. This happens all the time, usually with heirs, but it can be squatters as well.

Under the tax lien system, current law, the investor may file a foreclosure lawsuit when its been at least 3 years since the first auction but no more than 10 years. If nobody redeems, the judge forecloses the lien, quiets title, and orders the clerk to issue a deed to the investor.

Because of a May 2024 statute amendment, anyone who has not received a final order of judicial foreclosure by 10/1/24 will be under the new rules.

The new rules are the earliest you can foreclose your liens is 4 years after the first auction. If nobody redeems in the judicial foreclosure lawsuit, BUT somebody with redemption rights demands a public auction, then the judge will order an auction on the courthouse steps.  Investor makes the opening bid for the total owed to it--taxes, interest, legal expenses and auction expenses. Bidding goes up from there. The investor can bid also. Winning bid gets the property, the quiet title order and the clerk's deed. First money goes to the investor for its taxes, interest, etc. Next money is paid into court for the judge to decide how it should be distributed among the people claiming to have redemption rights.

@Julie Dawn tapia. Jefferson County switched types of tax sales. There are two different sets of laws, what we call the old system and the new system. Most counties now use the new system. A few still use the old system. Jefferson County changed to the new system for auctions starting in 2021 and afterwards.  Under the new system, you have only a lien on the property. You are not entitled to possession. You cannot rent it out. You cannot make improvements. All you can do is wait the required number of years and then file a lawsuit to foreclose your lien.

Hi @Tiarai Fields.

With tax lien certificates under the new system

1. There is no need to provide extra redemption protections for lienholders who might have been unaware of the tax auction. All people with potential redemption rights, including lienholders, must be named as defendants in the judicial foreclosure lawsuit. That is their opportunity to decide if they want to redeem or not.

2. There are NO possession rights with only a tax lien certificate. After you foreclose your lien and have the court order, you are entitled to possession. That is because at that point you are an owner, just like any other owner of real estate.

3. Redemptions are handled with the county, even if it has been more than 3 years. The tax lien certificate holder can wait up to 10 years after the auction before filing its lien foreclosure lawsuit. At any time before that lawsuit is filed, someone with redemption rights can redeem directly through the county.  After the lawsuit is filed, they file in the lawsuit itself. Nothing is done directly with the investor.

If you don't turn in your certificate and get a deed, the law assumes you have ownership, but it's not completely clear-cut. You can continue making the annual payments and preserve your interest. It is best to get the deed, though. The fee is only $5.  Then for sure you are the owner and there is no dispute with insurance companies if you suffer a loss.  If for some reason you need to rely on regular adverse possession instead of tax sale short statute of limitations, it requires ten years of possession after color of title. That tax deed is your color of title. Also, if you have to go to court for some reason and you have a tax deed, the probate judge's signature is prima facie evidence the tax sale was done correctly.  Someone can dispute that and then you'll have to prove it, but usually nobody disputes it. But, if all you have is a tax certificate, you MUST prove the tax sale was done properly, even if the other side does not raise that issue. That is only if you are in court, though.