As a new service for LAILTA members and subscribers, you can expect an email each month with a short discussion on matters of interest to the real estate attorney and title agent. This will be a monthly service, except for the months in which seminars are scheduled. LAILTA will email you recent cases of interest, notes on legislation and reminders of seldom thought of statutes and rules that affect our day to day work.
RANDALL E. OLSON
OLSON & O’NEILL, APLC
1819 W. Pinhook Rd., Suite 114
Lafayette, LA 70508
Telephone: (337) 235-0047
Facsimile: (337) 234-7477
TAX SALES – BEWARE
Purchasing property at tax sales has become quite popular. The return on the investment is very attractive (18% after year 1, and 1% per month thereafter). Another attractive feature of these tax sales is the potential to acquire complete and full ownership of these properties for very little money out of pocket.
What we are finding out is that it is very difficult to get “good” title to a property purchased at a tax sale. A recent case illustrates this point.
In the case of Cititax Group, L.L.C. v. Leon J. Gibert, Jr. et al, the Fourth Circuit Court of Appeals reversed the trial court and annulled a tax sale of property. In this case, the subject property was bought by Mr. Gibert in June, 1995. The subject property was purchased by Cititax at tax sale in November, 2002 after the 2000 and 2001 taxes had not been paid by Mr. Gibert.
Service of notice of the tax sale was attempted to be served on Mr. Gibert by certified mail, but the return receipt produced at trial had the wrong address for Mr. Gibert (38 Newcomb Blvd. instead of his correct address of 30 Newcomb Blvd.), nor did it have a true signature as well.
Cititax filed suit to quiet title on March 2, 2010, well over the 3 year and 5 year statutory requirements. On January 14, 2011, Gibert filed his own suit for Redemption/Annulment of Tax Sale. The 2 cases were consolidated and tried at a bench trial. The Trial Court ruled in favor of Cititax finding that the service on Mr. Gibert was reasonable, the sale was advertised in the newspaper as an additional notice, and that the notice met the standard of the Mennonite Board of Missions v. Adams, case.
The appellate court reversed the trial court on its factual finding that notice to Mr. Gibert was sufficient and met the due process requirements established in Mennonite. The appellate court concluded that since the notice was sent to the wrong address, the tax debtor was not given the adequate notice required by Mennonite, and therefore the sale was an absolute nullity, not a relative nullity.
This decision follows pretty closely with several other decisions that make it pretty clear that the courts in this state are very reluctant to approve a tax title unless the tax debtor got actual notice of the sale. Although Mennonite does not specifically require actual notice to the tax debtor, the case law so far interpreting it in this state would justify most title examiners requiring it to approve a title. Most of the title insurance underwriters are very reluctant to authorize the issuance of a title policy unless you have actual proof of notice to the tax debtor and have met all the other requirements set forth in our state statute.
So I guess the moral of this story is BEWARE of tax titles that you see in your abstracts. The suit file should be reviewed thoroughly. If the suit file does not have clear evidence of actual notice to the tax debtor of the tax sale, and the tax sale purchaser cannot produce such proof, then in this writer’s humble opinion, the title is at least clouded or suggestive of litigation.