New Hope for Outlaws (Tax Buyers)

by Chris on May 16, 2016

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

{ Comments on this entry are closed }

Just a Little Bit Out of the Rabbit Hole

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.

{ Comments on this entry are closed }

Catch 22

July 2, 2015

Tell me if this sounds familiar: you bought a property at tax sale, now code enforcement is ordering you to appear at administrative hearings and threatening daily fines? I get a lot of inquires about what to do in this situation. Unfortunately, I don’t have a good solution. My experience with this issue is jaded from […]

Read the full article →

Tax Lien Proposal

December 16, 2014

Over the past year, the Louisiana State Law Institute , Tax Sale Committee has met regularly to discuss tax sales. One proposal, among others, is a switch from tax sales to a tax lien system which is employed by some other states. I, for one, am not a fan of the tax lien system for a […]

Read the full article →

New York courts see uptick in foreclosure filings.

November 12, 2013
Thumbnail image for New York courts see uptick in foreclosure filings.

In the wake of a housing crisis New York’s chief justice imposed criteria aimed at curbing the volume of foreclosures. In October 2010 Chief Judge Jonathan Lippman created a affirmation requirement for the purpose of improving lender’s ability to vouch for the accuracy of their court papers, which had been mired in difficulties. The 2013 […]

Read the full article →

D.C. Mayor cancels tax sales, creates office of real estate tax ombudsmen; council passes emergency measures.

September 25, 2013

In the city of Magnificent Intentions, the mayor and councilpersons rally around measures to stop tax-lien abuse. Mayor Vincent Gray and his Chief Financial Officer Natwar M. Gandhi took executive action cancelling over a hundred tax sales recently. Additional action includes the creation of the position real property tax ombudsmen which is intended to aid […]

Read the full article →

Constitutional Amendment?

July 29, 2013

There is a glimmer of hope coming from the Louisiana legislature. Recent enactments seek an amendment to Article VII Sec. 25 of the Louisiana Constitution. The subject changes can be found in Louisiana House Bill 256, which proposes a shortened redemption period for abandoned property sold for unpaid ad valorem taxes. If passed, the three […]

Read the full article →

Tax sales: the thirty year headache (due to armchair lawyering).

June 11, 2013

In the recent months I’m being reminded over and over about the uncertainty of tax sales in Louisiana. Clients come to me for advice, and it is difficult to turn away (what in the past was) business. Honestly, it is a bit disheartening to turn away prospective clients. Some people react in anger, others in […]

Read the full article →

Rope-A-Dope-Louisiana Style

April 9, 2013

On the one hand, online tax sale companies have proclaimed the ease and security of tax lien purchases attracting may unsophisticated buyers. But, on the other hand, the resolution of tax titles became immeasurably more complicated and expensive this year. The courts have completed a clean sweep abandonment of many established legal principles, on which […]

Read the full article →

It’s been too long.

March 4, 2013

Ladies and gentleman, a post is long overdue. For those emotionally invested in the tax sale field, it was a bumpy ride. New legislation and new Louisiana court decisions, observed as “anti-tax buyer” to some. Realistically, this Louisiana populism bubbling up to the forefront. And so, a nation not of men, and a civil law […]

Read the full article →