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Table
of Contents
Getting Started
Bidding Strategies
Foreclosure
of the right to redeem
Monies to be paid to you from the Original Debtor at time of
redemption
After redemption period has expired
Getting Started
One of the first things to consider
before investing in Tax Sale Properties is to research the property that you are
interested in purchasing. Before a property is advertised to be sold, the Tax Commissioner
or other Firm must conduct a diligent search on the property. Following their search they
must then notify all interested parties or lien holders. This process eliminates much of
the burden of the Tax Sale Purchaser. Keep in mind, when a property is sold at tax sale,
most liens are erased once foreclosure of the right of redemption is completed, this includes
Mortgages and other instruments. However, these owners and / or interest holders are entitled to redeem the property
within 12-months of the execution (sale of property). It is strongly suggested that all
buyers go to see the property in person and review the Warranty Deed that is noted in the
property description as advertised in the newspaper. If the property is located in a
private gated community you should call your Tax Commissioner to get access to see the
parcel. Legal descriptions in the newspaper are intended to show where a property
is located, however ,sometimes they can be vague or confusing. If you are unsure of the location of
a property call your Tax Commissioner and ask for assistance. Always compare the
properties legal description to the Ariel photo (Usually located in your local Tax
Assessors office Mapping department) to make sure the property is not land locked or
inaccessible.
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As Tax Sale day arrives it is important to know which properties that
you intend to bid on. You should be able to recognize the description as it is read.
Investors have many different bidding strategies. As new laws passed enabling Tax Sale
Purchasers to collect as much as 60% return on their investment if a property is
redeemed, bidding strategies have changed. Some Investment firms open their bid as
high as the tax appraised value of the property, though this is still rare in smaller
counties you may run into this stronghold tactic once in a while. For the most part you
should base your bid on what you perceive as a smart investment. This can be achieved in
one or two ways, by remembering that 20% to 60% return on your investment is a sound
philosophy, unlike the stock market you are virtually guaranteed that in the worst case
scenario, you will be awarded all of your money back if there is a problem
with the sale. Secondly, if the property is not redeemed, your bid should be low enough
that you take possession a piece of property at a discounted rate. One last thing to consider is
that if the property is connected to that of your own, and could dramatically increase the
value of your property, in this case appraised value could be a definite consideration in your bidding
process.
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It is your responsibility as a purchaser of a Tax
Sale Property to foreclose the right of redemption on that property. Georgia Code Sections
48-4-40 through 48-4-48 provide the complete process. The following is a condensed version
of these codes:
When real property is sold under a tax execution (sold at tax sale), the original
taxpayer or any persons having a right, title, interest in, or lien upon the property may
redeem the property at any time within 12 Months from the date of the purchase at tax sale
by paying the redemption price. The property may be redeemed at any time during this
period until the Tax Sale Purchaser terminates the right to do so by giving proper legal
notice. The 12-month limit does not begin to run, however, until the Tax Purchaser pays
the amount that he or she bid. (After your purchase get a receipt, signed and dated by the
tax commissioner) The Tax Purchaser is not prohibited from consenting to redemption after
the statutory period has expired, and as a matter of grace grant such a privilege.
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The redemption price to be paid to you, if the original debtor chooses to redeem is the
amount paid for the property at the Tax Sale, plus 20% percent of that amount for
the first year, or fraction of a year, elapsing between the sale date and the date the redemption is
made, plus any tax paid on the property during this period by the Tax Purchaser after the
sale. If redemption is not made within the 12-month redemption period and after the notice
terminating the right to redeem has been properly issued and advertised, there must be
added to the redemption price the sheriff’s cost of serving notice and the cost of
publishing notice.
AMENDED CODE
SECTION REGARDING REDEMPTION PREMIUMS
Said
title is further amended by striking Code
Section 48_4_42, relating to the amount
payable for redemption, in its entirety and
inserting in lieu thereof a new Code Section
48_4_42 to read as follows:
"48_4_42.
The amount required to be paid for redemption
of property from any sale for taxes as
provided in this chapter, or the redemption
price, shall with respect to any sale made
after July 1, 2002, be the amount paid for
the property at the tax sale, as shown by the
recitals in the tax deed, plus any taxes paid
on the property by the purchaser after the
sale for taxes, plus any
special
assessments on the property, plus a premium of
20 percent of the amount for each
the first year or fraction of a year
which has elapsed between the date of the sale
and the date on which the redemption payment
is made and 10 percent for each year or
fraction of a year thereafter. If
redemption is not made until more than 30
days after the required
notice provided for in Code Section 48_4_45
has been given, there shall be added to the
redemption price the sheriff´s cost in
connection with serving the notice,
and the cost of publication of the
notice, if any, and the further sum of
20 percent of the amount paid for the property
at the sale to cover the cost of making the
necessary examinations to determine the
persons upon whom notice should be served.
All of the amounts required to be paid by this
Code section shall be paid in lawful money of
the United States to the purchaser at the tax
sale or to the purchaser´s successors."
20% During the first year
Add
10% A year and a day
30% plus expenses return if redeemed
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After redemption period has expired
The Tax Sale Purchaser is to make out an original
notice in accordance with a form shown in the statutes and provide a copy for each person
to be served. The purchaser is to deliver these, together with a list of persons to be
served, to the sheriff of the county in which the land is located, not less than 45 days
before the date set in the notice for termination of the right of redemption. Within 15
days, the sheriff must serve a copy of the notice upon all persons on the list residing in
the county and make an entry of such service on the original notice. Leaving a copy of the
notice at the residence of any person required to be served is considered sufficient
service. If the sheriff makes an entry that he or she has been unable to serve the notice
on any person, the purchases must immediately have it published in the official county
newspaper once a week for two consecutive weeks. This constitutes service.
Upon payment of the sheriff’s cost, the original notice must be returned to the
Tax Sale Purchaser. The notice and entries on it may be recorded on the deed records in
the Clerk of Superior Court’s Office in the county in which the land is located.
In the event that the property is redeemed by the Original Debtor or interested parties
(Mortgage Companies, Banks or Lien Holders etc.), the Tax Sale Purchaser must make a
quitclaim deed (Release of Claim) to the Original Delinquent Taxpayer, reciting, among
other things, who paid the redemption money. The redemption of the property gives back to
the Original Delinquent Taxpayer the title conveyed by the tax sale, subject to all liens
existing at the time of sale.
If the redemption is made by a creditor of the Original Delinquent Taxpayer or other
persons having interest in the property, the amount expended by either constitutes a first
lien on it and must be paid prior to any other claims on the property. However, it is
necessary that the quitclaim deed have been properly recorded in the Clerk of Superior
Court’s Office.
The Purchaser of a Tax Sale Property may sale the property before the redemption period
has expired. However, the person buying from the Tax Sale Purchaser acquires the
defeasible (i.e., can be annulled) title of the Tax Sale Purchaser, subject to the right
of the Original Delinquent Taxpayer to redeem it within the period prescribed by law
(12-months).
Although, as noted above, the purchaser receives only a defeasible title before the
redemption period expires, the purchaser acquires sufficient interest in the property to
render him or her liable for the taxes that become due on it.
No Tax Sale Purchaser is entitled to rents and profits arising from the property during
the redemption period. A Tax Sale Purchaser may obtain a court order to enable them to
make improvements upon the property in the event that the improvement is aimed at the
preservation of the value of said property, i.e. a leaking roof that is causing water to
damage a home.
A title under a tax deed properly executed prior to July 1, 1989 shall ripen by
prescription after a period of seven years from the date of execution of that deed.
However, see your local real estate attorney to inquire about a silent title action.
A title under a tax deed executed on or after July 1, 1989 shall ripen by prescription
after a period of four years from the date of execution of the deed.
Notice of foreclosure of the right to redeem property sold at the tax sale shall not be
required to have been provided, in order for the title to such property to have
ripened.
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