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.

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