Tax Sales in Georgia

A “Tax Sale” in Georgia is a foreclosure of the ownership of property by the County Sheriff when the Homeowner falls behind on his/her property taxes. The Homeowner, in such a situation, is known as the “Defendant in FiFa”. These types of foreclosures are conducted on the steps of the County Courthouse on the first Tuesday of each month.

A Defendant in FiFa’s property is sold to the highest bidder for a price that covers the outstanding property taxes due on the property. However, the winning bid price may be much higher than the amount required to pay the outstanding property taxes. The individual or entity who acquires the property as the highest bidder, who is called the ”Purchaser”, then holds a “Defeasible” title to the property. Such Defeasible title does not provide “possession” of the property until the “Redemption Period” is foreclosed and clear fee simple title is established by subjection to a Court via a Quiet Title action. The Purchaser must refrain from any action on or against the property for a period of one (1) year (“Redemption Period”). The Defendant in FiFa, or any other person or entity holding an interest in the property may “Redeem” the property during this Redemption period.

Once the Redemption Period has run, the Purchaser may then proceed with “Foreclosing the Right of Redemption” by notifying all parties with an interest in the property of a date on which the right of Redemption will be foreclosed. The Purchaser must also run an advertisement in the legal organ of the county. The contents of the notice to be made to the interested parties, as well as contents of the advertisement, are set out by Statute.

Once the foreclosure of the Right of Redemption is complete, the Purchaser may then file a Quiet Title action in the Superior Court of the county within which the property lies. Such a Quiet Title action requires that all parties having an interest in the property be served with the action. Assuming no one Answers or objects, then the Judge will eventually sign the Order granting the Purchaser fee simple title to the property. At this point the Purchaser or a new buyer may seek a Title Insurance Policy.

The Risks

Buying a property at a Tax Sale at a price that, in most cases, is well below the value of the property sounds like a very profitable investment. However, there are many risks involved. For instance, some Counties will sell a property at a tax sale where the Defendant in FiFa is deceased. Such a sale is void under early Georgia law. Should the Tax Deed misidentify the actual owner or contain an incorrect property description will also be found void. Careful research of the title history of a prospective tax sale property is essential and must be part of the due diligence of a tax sale purchaser.

This entire process of purchasing properties at tax sales is driven by statutory requirements. Additionally, a great deal of case law has evolved in order to resolve the many legal disputes that surround this area of Georgia law which allows such sales. We strongly recommend a prospective purchaser retain an experienced attorney to assist in this process.