Tax Deed Buyers Owe Homeowners Assessments and Taxes

When a tax deed is purchased, the title is ‘defeasible’ and the purchaser does not have an immediate right of possession.  Nevertheless, the Court of Appeals has held that the interest held, even during the redemption period, “is sufficient to render him liable for taxes accruing upon the property [and] . . . this interest is also sufficient to render [the tax deed purchaser] liable for homeowners association assessments.” Croft v. Plantation Property Owners Assn., general, 276 Ga.App. 311, 314 (2005).

In a 2017 decision, the Court of Appeals also held that “[i]t makes no difference that … [the tax deed purchaser] actually barred the Association’s right of redemption,” and it also makes no difference if the tax deed buyer was or wasn’t able to recoup homeowners’ assessments from a redeeming party. Canady v. Cumberland Harbour Property Owners Association, Inc., Case A16A1931 (Ga.App. 3/1/2017) (“[A] tax sale purchaser of property is liable per Croft and OCGA § 48-4-42 for the payment of homeowners assessments that accrued on the property after the tax sale during the redemption period.”).

Fortunately, for tax sales after July 1, 2016, O.C.G.A. 48-4-42 now provides that a tax deed owner is entitled to be paid back certain amounts which it paid to an association, if the tax deed is redeemed.

Some homeowner or condominium association law firms have claimed that a tax deed buyer owes amounts to the association from before the tax sale.  They rely upon two statutes:

Property Owners’ Associations O.C.G.A. 44-3-226(c) (“Unless otherwise provided in the instrument and except as provided in subsection (d) of this Code section, the grantee in a conveyance of a lot shall be jointly and severally liable with the grantor thereof for all unpaid assessments against the latter up to the time of the conveyance without prejudice to the grantee’s right to recover from the grantor the amounts paid by the grantee…”).

Property Owners’ Associations O.C.G.A. 44-3-232(a) (“All sums lawfully assessed by the association against any lot owner or property owners’ association lot, whether for the share of the common expenses pertaining to that lot, fines, or otherwise, and all reasonable charges made to any lot owner or lot for materials furnished or services rendered by the association at the owner’s request to or on behalf of the lot owner or lot, shall, from the time the sums became due and payable, be the personal obligation of the lot owner and constitute a lien in favor of the association on the lot prior and superior to all other liens whatsoever except: (1) Liens for ad valorem taxes on the lot …”).

Condominiums O.C.G.A 44-3-80(e) (“(e) Unless otherwise provided in the condominium instruments and except as provided in subsection (f) of this Code section, the grantee in a conveyance of a condominium unit shall be jointly and severally liable with the grantor thereof for all unpaid assessments against the latter up to the time of the conveyance without prejudice to the grantee’s right to recover from the grantor the amounts paid by the grantee therefor…”).

Condominiums O.C.G.A. 44-3-109(a) (“(a) All sums lawfully assessed by the association against any unit owner or condominium unit, whether for the share of the common expenses pertaining to that condominium unit, for fines, or otherwise, and all reasonable charges made to any unit owner or condominium unit for materials furnished or services rendered by the association at the owner’s request to or on behalf of the unit owner or condominium unit, shall, from the time the same become due and payable, be the personal obligation of the unit owner and constitute a lien in favor of the association on the condominium unit prior and superior to all other liens whatsoever except: (1) Liens for ad valorem taxes on the condominium unit; …”

O.C.G.A. 44-3-226(c) and O.C.G.A 44-3-80(e) address a new owner’s personal liability (i.e. the ability of the Association to sue them directly on the debt).  O.C.G.A. 44-3-232(a) and O.C.G.A. 44-3-109(a) deals with the Association having a lien on the property.  Arguably, when the grantor on a Tax Deed is the Tax Commissioner, and is not  the former owner, then the grantee of the Tax Deed receives no personal liability, because there were no “assessments against the latter [i.e. the Tax Commissioner/grantor]” who had no liability to the Association for assessments.

Any Association lien was lower in priority than the tax fi.fa. which led to the tax deed, and the barment process will divest liens anyhow. See OCGA § 48-4-45(a)(1)(C).

However, under the Croft decision, the Tax Deed buyer will become liable for new Association assessments on and after the date of the Tax Deed.  For tax sales after July 1, 2016, the Tax Deed buyer can at least get reimbursed for those amounts if the property is redeemed.