Notice and procedures affecting tax sale property.

by Chris on February 15, 2012

An owner of real estate who is delinquent in paying taxes is presumed to have knowledge that his property will be listed for sale to satisfy the taxes due. See Reed v. Stinson, 188 So. 509, 511 (La. App. 2 Cir. 1939). Apparently this was the perspective held by legislators and judges for almost fifty years. Sale for nonpayment of taxes is a harsh remedy, but property taxes are a crucial source of revenue for the smooth operation of the state.

The authority of the state to tax property is found in the Louisiana constitution. Similarly, the authority to enforce payment of ad valorem taxes via tax sales is also found in the constitution. Positioning these rights in the organic law of our state is evidence of the importance to the state of real property taxation. For the most part, the Louisiana constitution grants the authority to tax and conduct tax sales, but delegates many (but not all) procedural aspects to the legislature. To avoid jeopardizing this source of income the state has a vested interest in enacting consistent and reliable procedures that can withstand  constitutional scrutiny. It has long been the policy of the state “to encourage the commercial flow of title and rights to immovable property” and “[t]he evident public policy behind Louisiana’s constitutional and statutory scheme for the payment and collection of ad valorem taxes” is logically carried out in the sale of property for unpaid taxes.

However, the harsh remedy of tax sales sometimes conflicted with modern notions of due process. For example, if not redeemed, a recorded tax sale operated as a cancellation of all conventional and judicial mortgages. See Louisiana Revised Statute 47:2183(B) (2004) (Now repealed). Jurisprudence commonly held that a tax sale recorded for over five years was completely valid, even if the previous owners were never notified. See also Thompson v. Walker, 104 So. 2d 721 (La. 1958), on reh’g, 103 So. 2d 65 (La. 1958).

Everything changed in 1983 when the U.S. Supreme Court ruled that notice was a minimal constitutional precondition to a tax sale. Although Mennonite does not equate lack of notice to an invalid tax sales, Louisiana courts began to interpret Mennonite to hold that the failure to meet such a precondition renders a tax sale absolutely null. Whereas earlier courts often upheld the harsh remedy of tax sales, post-Mennonite courts upheld the harsh remedy of “absolute nullities.”

With the specter of “absolute nullity” the core issue surrounding most tax sale cases became notice. What was good notice? Is actual knowledge of a tax sale just as good as certified mail notices? Is notice after a tax sale, but before the redemption period a sufficient notice (since they still have time to redeem)? Does service of the lawsuit constitute proper notice? Who issues notice? Does every owner of property have to be notified? Does every owner require their own individual notices? Does a notice with misspelled names invalidate notice? As you can see, what is, and what is not sufficient notice is a subject matter for discussion in an of itself. In the coming days expect more posts on the laws and jurisprudence on notice, an exploration of this nuanced subject matter, and the future implications the 2009 law may have on tax sale property.


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Peyton March 27, 2012 at 7:31 PM

This is cool!

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