In ancient England, an undesirable could be declared an “outlaw” which meant they were outside the protection of the law.
Recent court decisions essentially deny tax buyers the protection of the courts, declaring even final, non-appealable judgments as meaningless. For example, a judgment confirming a tax title, under certain circumstances can be “vacated,” even if properly served and compliant with law.
Before the enactment of the tax sale revisions of 2009, there was no mechanism for recovering the taxes paid by the tax buyer and no provision for reimbursement of attorney’s fees and court costs. The 2009 revision to Title 47 enacted a series of after-the-tax-sale notices specifically designed to comply with due process as interpreted by the United States Supreme Court.
This was the Louisiana legislature’s effort to remedy any lack of notice in connection with the tax sale. The Fourth Circuit in the Surcouf opinion held the legislature cannot cure a defect in notice of a tax sale, so any defect in the pre-sale notice doomed the validity of the sale.
However, the Second Circuit recently addressed the validity of notice under La. Rev. Stat. § 47:2156 in Adair Asset Management v. Turney. In that case, the court held the process of notice, relying on post sale notice, was valid, since any interested party had notice and an opportunity to defeat the sale.
Stay tuned. The Louisiana Supreme Court has avoided applying the 2009 statute retroactively, so one of these decisions may yet land on Royal Street
by Chris on March 29, 2016
“This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.”
Morpheus, the Matrix
Louisiana Courts have chosen to treat tax sales without complete prior notice as “absolute nullities.” An absolute nullity, as the Civil Code defines is a “contract” that violates a rule of public order, or is illicit or immoral. The average person might not think the tax collector would be treated the same as a “hit man” or vote seller, but that’s why we have courts. Usually, an absolute nullity has no effect whatsoever which could have been a big problem for a tax buyer.
In Mooring Tax Asset Grp., L.L.C. v. James, 2014-0109 (La. 12/9/14, 8); 156 So.3d 1143, 1148, a property owner purchased property that had a prior recorded tax sale against the prior owner. (A title examination snafu, no doubt). The Supreme Court held the property owner, who seeks annulment of a tax sale, must pay taxes and interest to the tax buyer even if the sale was an absolute nullity. The trial court as well as the Court of Appeals previously ruled the property owner did not have to pay anything to annul the tax sale, since it occurred prior to his purchase.
Previously, the courts have held tax buyers have no due process rights where the La. Tax Commission cancels a tax sale without notice or reimbursement to the tax buyer nor does the tax buyer enjoy the legal principal of res judicata. The unrelenting negative rulings against tax sales have made obtaining clear title exceedingly difficult. The trip down the rabbit hole of absolute nullity has apparently made clear the logical folly of calling a tax sale without notice illicit and immoral – just don’t count on it happening again.
Unfortunately, the court only required payment of the sums due under Article VII of the constitution which mandates a 10% interest rate. No mention of the statutory reimbursements which would include a 5% penalty and 12% per annum interest.
