Adjudication: a term of art in the tax sale field.

by Chris on August 20, 2012

Often times the word adjudication is used interchangeably with respect to property sold for unpaid taxes. Although occasionally the term adjudication applies to the sale of property for taxes generally, usually it applies to the situation where the taxing authority acquires property.  The taxing authority acquires property when, at the tax sale auction, no one bids on the particular property thereby transferring title to the “state.”  In essence the state is a kind of a default or “bidder of last resort,” taking title to all property no one would otherwise bid on.

In the old days, adjudicated property or property held by the state for unpaid taxes was a fruitful source of acquiring property at low cost.  Individuals could petition the State to re-auction these properties. Alas, the fun is over since those properties now must be sold by the state under a rather cumbersome process, all conducted at the prospective purchaser’s expense.

Like most things in the tax sale field, inconsistency reigns supreme.  The constitution specifically forbids forfeiture of property, but a transfer of title to the state, where no taxes are paid, smells a lot like forfeiture.  The courts have held that an adjudication actually transfers title to the state. The state pays no taxes on this adjudicated property, since the state is exempt from taxation.  So, a tax sale to an individual, where adjudication for a prior year has occurred, is subject to annulment since the property should have been removed from the tax rolls.

On the other hand, the good news is that adjudicated property remains subject to redemption until the state goes through the cumbersome process of disposition.  So, if you buy a property at tax sale that is adjudicated to the state the next year, it is effectively  “parked,”  thereby permitting a tax buyer to simply wait out his redemption period, or even later, before deciding to clear the tax title.

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