Louisiana – A Banana Republic?

by Chris on August 13, 2012

Famously, in 1985 a state legislator proclaimed that Louisiana was a banana republic. With ongoing questions about tax sale titles we may become a third world country like the Philippines or Algeria where “untitled” property is not unusual.   If you’ve seen the Algeria episode of HGTV, you may have marveled at property marketed in the “medina” without a title. Obviously, there was either no record owner or the record owner had long since departed.  Even on HGTV, the prospective American buyers backed off of this offering.

Many, if not most tax titles are of abandoned (even blighted) property where the record owners have died without a trace, left the state, or even the country. Notification can be impossible. If the courts continue to describe tax sales with notice problems as “absolute nullities,” we may have to create a new market – untitled property. Such properties could not get title insurance, so no loans would be available to purchase this property or finance repairs. Ultimately, tax buyers would figure this out and stop bidding at tax sales, a dangerous result for our communities where schools, roads, police and fire protection depend on taxes.

In a 2008 decision, the Louisiana Fourth Circuit Court of Appeals affirmed a trial court which had “vacated” a final unappealable judgment confirming a tax sale for lack of notice prior to the tax sale.  This meant that no one could rely on a judgment confirming a tax title. Fortunately, the First Circuit recently reached the opposite result saying, “a judgment is a judgment is a judgment.” (not a real quote, but Gertrude Stein would be proud). This First Circuit case has been awaiting review in the La Supreme Court for eight months. Meanwhile, the market for tax titles is at a standstill.


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