The mystery of Tax Sales

Tax sales are a bit of a mystery, at least to me. I’ve heard of tax sales for years, but never really knew anyone who bought a property at a tax sale, or lost their house as a result of one.

This week I was at the courthouse on Tuesday morning and saw a crowd of people on the courthouse steps. That got me to thinking about tax sales, which means I had to hit the books.

Here’s the basics. You can buy a property at a tax sale by paying the past due taxes on the property. The tax commissioner literally sells the property for taxes on the courthouse steps. But that doesn’t give you ownership of the property, at least not yet.

When you buy a property, you immediately get a 20 percent return on your money, guaranteed, if the property owner redeems the property within one year. It’s actually a pro-rata 20 percent, meaning if the property owner pays you off in six months, you get a 10 percent return on your money. Each additional year you hold the property, you get an additional 10 percent per year on your money.

Not bad, so long as someone pays you the taxes. However, you do not have the right to possess the property, collect the rents, sell trees, etc. At least not yet.

Let’s say the prior owner doesn’t pay you, how do you get your money? You can foreclose on the tax lien that you possess, giving you ownership of the property. You have to serve the property owner, the occupant of the property, the lien holder if there is one, and anyone else holding an interest in the property. You have to publish the notice of foreclosure in the legal organ of the county in which the property lies (the Houston Home Journal is Houston County’s legal owner.) There is a legal process spelled out in OCGA 48-4-45 to 47. Apparently it is fairly easy to follow.

The delinquent tax payer, or non-payor as it were, has a limited amount of time to pay you your money, but it must be at least 30 days from the date of the notice. Once you foreclose, the property is yours to do with as you want. You can literally own the property, free and clear of liens, mortgages, and judgments, for one year’s taxes on the property. It can be a great deal even if they pay you, because you get 20 percent annual interest for the first year, which your local banker can’t touch.

But there are headaches and heartaches involved, mostly involving having to remove someone from their home who have obviously fallen on hard times. It is a risk vs. reward system.

If you’ve had any experiences with tax sales, good or bad, let me know how it went. I’d be curious to hear your thoughts. 

Kelly Burke, former district attorney and magistrate judge, is engaged in private practice. He focuses on personal injury cases and corporate litigation. These articles are not designed to give legal advice, but are designed to inform the public about how the law affects their daily lives. Contact Kelly at kelly@burkelasseterllc.com to comment on this article or suggest articles about the law that you’d like to see.

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