Taxpayer Wins -- Georgia Supreme Court Affirms Injunction Against Barring Redemption Rights After Tax Sale

The Georgia Supreme Court affirmed a trial court's injunction preventing a lien fund from barring a property owner's right to redeem her property sold at a tax sale while litigation proceeded over the legality of the tax sale, notwithstanding the owner's failure to tender the full redemption amount set forth in the Georgia Code under normal circumstances.  The court found that there was a dispute over whether the owner owed the unpaid taxes that were the reason for the tax sale, sothat full tender of the tax sale redemption amount was unnecessary.  American Lien Fund, LLC v. Dixon, Supreme Court of Georgia, Case No. S09A1602, decided March 1, 2010. 

American Lien Fund (ALF) was the highest bidder at a tax sale on September 4, 2007 of the property owned by Sharon Dixon.  The sale occurred after tax fieri facias were issued by Fulton County in 2003, 2004 and 2005 for unpaid property taxes.  Dixon filed suit on November 29, 2007 seeking redemption of the property under O.C.G.A. § 48-4-40 et. seq. and an injunction against any attempt to dispossess her, foreclose on the property, or collect on any lien on it.   Along with the suit,  Dixon tendered to ALF $6,019.97, based on the purported unpaid taxes.  ALF sought to foreclose on the right of redemption. 

ALF paid $300,000 for the property at the tax sale. ALF contended that Dixon could not file the suit unless she tendered the full redemption amount set forth in O.C.G.A. § 48-4-42, which in its estimation was over $390,000.  In support ALF cited O.C.G.A. § 48-4-47, which generally requires a full tender of the statutory amount by someone who wishes to redeem her property in order to prevent foreclosure of the redemption rights. 

The court disagreed with ALF.  The court noted that Dixon claimed that she had paid all of her property taxes and that they were not due when the property was sold.  Thus, the court held that the case fell under the exception to the full tender rule, expressed in O.C.G.A. § 44-4-47(b)(1), which states that the full tender rule applies "unless it clearly appears that:  (1) the tax or special assessment for the collection of which the execution under or by virtue of which the sale was held was not due at the time of sale...."  ALF argued that this exception did not apply because Dixon had merely claimed that no taxes were due from her, and thus the situation did not satisfy the requirement that it "clearly appear" that the taxes were not due.  The court rejected this argument notwithstanding the language of the statute, finding that there is no guidance as to what "clearly appears" means under the law.  In the lawsuit at hand, Dixon claimed her taxes were paid, and ALF claimed the opposite, raising a dispute on the facts.  In that situation, the court said that ALF's argument based on a finding of what "clearly appears" would require the trial court to decide the facts of the case before deciding whether to grant an injunction.  Refusing to make that decision, the court also noted the decisions declaring the court's view that the collection of taxes through the sale of the taxpayer's property is a harsh procedure, and that policy requires interpreting the tax sale laws, and the redemption rules therein, in favor of property owners.

The upshot of this is that if a taxpayer wants to redeem property sold at a tax sale, it can prevent foreclosure of the redemption rights if it claims that it did not owe the taxes that caused the sale.  The taxpayer need not provide any evidence other than its mere claim regarding the taxes to block the barring of the redemption.