Online bids for tax sale properties begin at 100% ownership for the tax sale purchase price which includes the delinquent taxes, interest and administrative costs as set by statute. With two or more interested persons the tax sale purchase price remains the same, but the ownership interest of the bidders declines in the bidding process.
Thus with a single bidder, the tax sale purchaser gets 100% ownership interest of the person(s) who did not pay the ad valorem taxes on the property. With a competitive bidding, the tax sale purchaser may only be transferred as little as a one (1%) percent ownership interest in the property.
When the percentage of ownership is bid down, the delinquent taxpayer will remain the owner of the amount the ownership percentage is reduced. For example, if the successful tax sale purchaser receives a sixty (60%) percent ownership interest, then the delinquent taxpayer retains a forty (40%) ownership interest in the property.
With two property owners after a tax sale of less than one hundred (100%) percent ownership, both the tax sale purchaser and the delinquent property taxpayer are legally responsible for payment of 100% of the ad valorem tax payments on the property due at the end of the year of the sale and subsequent years. This payment responsibility if not prorated on the basis of ownership and tax collectors will only accept 100% of ad valorem taxes due on the property.
A tax sale purchaser acquires the ownership of the delinquent taxpayer owned at the time of the sale. Stated differently, the tax sale purchaser does not get "better" title to the property than the delinquent taxpayer enjoyed on the date of the tax sale.
If the delinquent property taxpayer owned less than 100% of the property at the time of the sale, the ownership interest of the tax sale purchaser is based upon that ownership interest.
For example if the owner of record only had a seventy (70%) ownership interest in the property at tax sale, a single tax sale bidder would get that ownership interest. If the tax sale ownership was bid down by two or more owners to a fifty (50%) tax sale ownership, then the tax sale purchaser acquires only a thirty five (35%) ownership interest in the property and the delinquent taxpayer would retain that same ownership interest.
Prior recorded mortgages, judgments, liens, servitudes, etc that "cloud" the title to the property stay in place and are superior to the tax sale purchase. Even if the tax sale purchaser later perfects his tax sale purchase, these encumbrances remain. (Perfection of tax sale purchases is the subject of an upcoming article.)
Many of the properties that go to tax sale have title problems that are not corrected by the tax sale. This factor plus the economic value of the subject property dictate the interest, or lack thereof , by prospective tax sale purchasers. If there are no tax sale bidders, then that property is adjudicated to the governmental body owed the taxes--the municipality, the parish or both.
John came to Shreveport in January of 1977 when he was transferred to Barksdale AFB.
He’s been active in Shreveport politics since deciding to make Shreveport his home.
John practiced law for 40 years and he now monitors local politics. He regularly attends Shreveport City Council and Caddo Parish Commission meetings.
John is published weekly in The Inquisitor, bi-monthly in The Forum News, and frequently in the Shreveport Times.
He enjoys addressing civic groups on local government issues and elections.