Can you take immediate possession of property?

by Chris on March 2, 2012

This post applies to all jurisdictions, but it has substantially more prevalance in New Orleans for the following reasons. New Orleans is arguably one of the most confusing areas of law regarding real estate in Louisiana. For years special rules have applied to New Orleans based solely on its status as the largest populated municpality in the state. This includes ostensibly antiquated areas of law such as laws of acquisitive prescription which are still very much applicable to New Orleans real estate.  Of course Hurricane Katrina has complicated things as well, and now more than ever blight is a major problem. The fact that New Orleans now conducts its tax sales online via civicsource.com allows anyone with internet access to buy property at tax sale. For these, and many other reasons, buying property specifically at a New Orleans tax sale can have many pitfalls.

There are two common reasons why people come into my office about a New Orleans tax sale. The first, and most importantly, is the purchase of less than 100% interest in the property. Sadly, if you have purchased property via the online tax sale it is very common to get less than full ownership, and even more often 1% ownership. Unfortunately, before you waste your time and money hiring or consulting an attorney you should know that 1% are essentially worthless. If you purchase a 1% deed then you must face the fact that you have simply lost your money. This is part of the risk of your investment.

The second most common reason a tax sale purchaser visits my office is a situation where the three year redemption period has not passed. Yet, since they are now the assessed owner they are receiving code enforcement notices, citations from the city, subpoenas to appear at administrative hearings, and threatened with daily fines of up to $500, and seizure and sale for liens exceeding $15,000. This is quite the precarious situation since the tax sale can be redeemed at any time for up to three years. Additionally, the new law does not extend a protection for tax purchasers that have taken possession and conducted renovations or repairs to the property. In fact, under the new law a tax sale purchaser that performs work on property may be liable to the owner for rent, and there is no requirement to reimburse for the repairs (In my opinion, this is one of the downfalls of the new law and a roadblock to recovery in New Orleans. There are many tax sale buyers that are more than willing to immediately possess, secure, and rehab property purchased at a tax sale but fail to do so because there is no protection).

Read these words with caution, because there is an exception to almost every rule. Generally it is not advisable for a tax sale purchaser to perform repairs or construction on tax sale property until after the three years. However, Louisiana Revised Statute 47:2158 does allow a tax sale purchaser to take possession via a writ of possession: 1) when necessary to comply with an order of a political subdivision for the purpose of enforcing property standards; and 2) upon the presentation of the order and a certified copy of a tax sale certificate for the  immovable. Upon presentation of these two documents a judge should (but there is no guarantee) issue an order to possess the property. As the statute states, the signed order must be recorded in the mortgage records. This way it acts as a lien on the property for a period of up to one year. In order to preserve the privilege that statute requires that a statement of lien and privilege detailing the costs to be recorded in the mortgage records within one year from the date the order was recorded.

Since the writ of possession is an extraordinary measure (taking over someone else’s property without their consent or knowledge) it it should be a remedy of last resort. Courts will not be tolerant of abuse of this procedure. In fact, the purpose of the new law’s stricter requirements is to protect tax debtors from unscrupulous tax purchasers taking property, doing renovations, inflating the numbers, and providing no documentation to do so.

In sum, it is probably worth your money to consult with a lawyer to see if you have the proper paperwork before you decide to even touch the property. Also, a lawyer can ensure that the Order is recorded in the proper mortgage records to preserve your lien. Keep documentation of everything even if it is a receipt for cutting grass. Remember that your protected for only one year unless further documentation is recorded in the mortgage records, again advisable to consult an attorney about this paperwork.

Stay tuned for an example order of possession coming soon on our forms page.

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