A "tax sale" is the most common remedy provided by local law for the collection of unpaid real estate taxes. Such a sale may be either a ministerial sale or a judicial sale.
Most states' statutes provide summary methods for the sale of property due to unpaid taxes. Certain officers are authorized to advertise the property for sale and sell it after a period of delinquency. These sales are known as ministerial sales and are conducted outside the scope of judicial proceedings. In some jurisdictions, the constitutionality of ministerial sales has been under attack on the grounds that the form of notice violates the due process clause of the U.S. Constitution. Ministerial sales are regulated wholly by statute. Company policy requires senior counsel approval prior to issuance of a policy when title is derived from a sale based only on notice by advertisement.
In some states, constitutional or statutory provisions prohibit the sale of land for the payment of delinquent taxes through the exercise of any summary, administrative or non-judicial proceedings. These states have established special judicial proceedings to foreclose for delinquent taxes and to authorize the subsequent tax sales. These proceedings are of two kinds:
Redemption from Tax Sale
A procedure whereby a former owner, his successors in interest, or anyone having substantial interest in the premises, may obtain legal title as complete and as unqualified as it was before the tax assessed. Repayment within the statutory period of the amount the purchaser paid for the property plus interest and costs redeems the property from the tax sale.
Tax Certificate of Sale
A certificate which is issued to a purchaser of property at a tax sale by the public officer who conducts the sale. A tax certificate is evidence of the payment of the delinquent taxes plus interest, and of the holder's right to a deed to the property in the event that the property is not redeemed.
A tax deed conveys title to property that was sold by the local or taxing authority for the nonpayment of taxes. The procedure leading to the sale of the property is set forth by statute. Generally the lien for unpaid taxes must remain unsatisfied for a specified period of time, proper notice must be given, the sale must be held at public auction and the defaulting taxpayer must be allowed a specified period of time to redeem the property by paying the purchase price plus the cost and interest.
Public records that show the taxable property, tax amounts, assessed valuations and other information.
A sale of property where taxes levied against the property or against the owner of the property remain unpaid after a certain time. Generally, the owner is given a period of time after the sale to redeem his property.
Title to property acquired by a purchaser at a tax sale. The purchaser at the tax sale comes strictly within the rule caveat emptor. One who claims title to land by virtue of a tax sale is bound to show the existence of every fact necessary to give jurisdiction and authority to the officer who made the sale, and a strict compliance by that person with all things required by the statute in carrying out the sale.
The purchaser at a tax sale does not usually acquire title to the land until the execution of a tax deed in his favor. The purchaser's interest during the period of redemption is in the nature of a lien. The money value of the lien is determined by the amount required by local statute to effect a redemption.
In most states, after the termination of the statutory period of redemption, the interest acquired by the purchaser through a tax deed is an estate in fee simple. The tax deed is commonly regarded as a new source of title, springing from the sovereign, independent of the previous chain of title, and obliterating all prior liens and interest affecting the land.
In other states, a tax deed passes only the interest of the person assessed, and the tax deed grantee takes the property subject to all the existing liens and interests.
In almost all the states. the statutes provide that land sold for taxes may be redeemed. This statutory right of redemption exists for the benefit of the owner and any other person who has an interest in the property. The statutes fix the time in which the redemption may be made (usually from one to three years). In some states, the right may be exercised at any time before the delivery of the tax deed.
Usually the purchaser is given a certificate of sale at the time of the tax sale. This certificate does not pass title, but is evidence of the purchaser's inchoate title, and it recites when the holder will be entitled to a deed if the property is not redeemed. The statutes also usually provide that the rights of a purchaser under a certificate of sale may be assigned. In most states, until the period of redemption expires, the owner is entitled to possession of the land and to its profits. The holder of the certificate of sale is usually entitled to a deed on the expiration of the period of redemption, but in some states a foreclosure of the right of redemption is necessary. The tax deed, when issued, must contain all the elements required by the statute, and show by its recitals a complete performance of all that is required by law to make the sale lawful. There must also be a description of the lands sold. If any of these requirements are omitted, the deed may become voidable or void. In some states, the statutes prescribe the form of a tax deed, and in such states it is generally held that a substantial compliance with the statutory form will be sufficient.
If a judicial sale
A proper quitclaim deed, or its equivalent, duly executed by the grantee(s) of the tax deed or the last grantee must be filed for record.
If a non-judicial sale
Any of the following documents (or a certified copy) must be filed for record:
No other proceedings requires such a thorough understanding of the relevant statutes as does proceedings based on a tax deed. There are no shortcuts or brief outlines to aid such an examination. The proceedings are entirely governed by statute and any deviation therefrom should be construed as a procedural defect and be specifically noted.
The following items need to be accomplished or considered when examining a tax title: