Understanding Georgia Law on Tax Sale Properties and Community Association Assessments
Overview
Under Georgia law, the purchaser of a property at tax sale owns the property subject to the right of the prior owner or lien-holder of the property to redeem it by paying the past-due taxes plus statutorily required interest and other charges. If the property is redeemed, ownership of the property reverts back to the owner of the property prior to the tax sale. The right to redeem lasts for at least 12 months, and can last for even longer depending upon how long it takes the tax sale purchaser to take the necessary statutory steps to terminate the right of redemption (the “Redemption Period”). Given that a tax sale purchaser owns property subject to the chance that the property might be redeemed and ownership restored in the prior owner, we often receive questions from clients as to whether the tax sale purchaser of the property is the real property owner for purposes of liability for community association assessments.
Liability for Community Association Assessments
We answer this question with an unequivocal “yes”. In fact, the Georgia Court of Appeals recently affirmed the liability of a tax sale purchaser for community association assessments that came due on the property after the tax sale in Canady v. Cumberland Harbour Prop. Owners Ass’n, Inc., 797 S.E.2d 674 (2017).
Liability during Redemption Period
In Canady, a tax sale purchaser argued that he should not be liable for assessments that came due on the lots he purchased at tax sale during the Redemption Period. The Georgia Court of Appeals found that Canady, as the tax sale purchaser, possessed sufficient title in the property during the Redemption Period to render him liable for assessments, and that his foreclosure of the right of redemption did not extinguish his liability for the assessments coming due since the date of the tax sale.
Amendments to the Law
In so holding, the Court noted that the Georgia legislature amended the law in 2016 concerning the amounts that must be paid to redeem a tax sale property such that with respect to any tax sale made after July 1, 2016, a person seeking to redeem a tax sale property must pay any assessment amounts the tax sale purchaser paid on the property, in addition to all other statutory redemption amounts.
Limitations on Liability
Boards should take note, however, that a tax sale purchaser only owes assessments that come due from the date of the tax sale and for so long as the tax sale purchaser owns the property, not any assessments that came due prior to the date of the tax sale. This is because the tax lien is superior to the lien for community association assessments, such that the tax sale wipes out the community association’s lien for unpaid assessments owed prior to the date of the tax sale.