Property that has been adjudicated for many years can end up with a redemption bill that far exceeds the worth of the property. Tax debtors must pay the full redemption costs and are prohibited from using the adjudicated property purchase process to reclaim property. La. R.S. 47:2209. However, if the tax debtor is not coming to reclaim the property then an exorbitant redemption bill can prevent the property from being returned to commerce thereby harming the political subdivision. The Louisiana Legislature enacted ACT 947 in 2010 that added language to La. R.S. 47:2202 to allow a political subdivision to sell property to the highest bidder at a public auction without setting a minimum bid or requiring an appraisal. This revision to the law should help political subdivisions get those less expensive properties back out into commerce. Political subdivisions that want to take advantages of this law should remember that the Louisiana Constitution still prohibits gratuitous donations. Therefore, a rationale that will support a no minimum bid sale should likely accompany such sales. Because each set of circumstances is different, the political subdivision should consult with its legal counsel to analyze whether decision-making on minimum bidding is constitutional and/or whether an Attorney General opinion is warranted.

We get this question a lot so have decided to answer it here. The tax debtor returns to redeem adjudicated property (or the grandchild of the tax debtor) and the property has been adjudicated for 15 years. Oftentimes the three-year constitutional right to redeem property (redemptive period) is mistaken for a deadline that, if passed, would prohibit the tax debtor from redeeming adjudicated property. Although the right to redeem has passed, there is no prohibition in the law that would prevent the political subdivision from allowing the redemption. La. R.S. 47:2246(A) authorizes the tax collector to allow the tax debtor to redeem the property after the initial 3 year period. La. 47:2245 authorizes him to issue the redemption certificate and provides him with the specific language to use. The person redeeming the property should pay the redemption costs and any additional notification costs in accordance with La. R.S. 47:2247. Where the confusion comes from:

Louisiana’s redemptive period is three years. The initial 3 years from the filing of the tax sale certificate by the tax collector when there was no third party purchaser is applicable redemptive period pursuant to the state constitution: Article VII, Section 25(B)(1) of the Louisiana Constitution; La. R.S. 47:2122 (11) The three year period runs from the date of recordation of the tax sale. During this time period, the tax debtor has an absolute right to reclaim “redeem” his property by paying the price given, including costs, five percent penalty thereon, and interest at the rate of one percent per month until redemption. This right to redeem exists regardless of whether the tax sale certificate is filed by a third party tax sale purchaser or the political subdivision. After that initial 3 year period (the applicable redemptive period), La. R.S. 47:2246(A) applies. La. R.S. 47:2246(A) states:

For property adjudicated to a political subdivision, after the expiration of the applicable redemptive period, any person may redeem tax sale title to property in the name of the tax debtor until any of the following shall occur:

• (1)The later of sixty days or six months, as applicable, after the notice required by RS 47:2206, or the filing of the sale or donation transferring the property from the political subdivision pursuant to RS 47:2201 et seq.
• (2)The granting of the order of possession pursuant to RS 47:2232
• (3)Sixty days or six months, as applicable, after the notice required by RS 47:2236.

(1)-(3) will take place if someone buys the adjudicated property or if the property was purchased at tax sale and the tax sale purchaser sends the 2206 notice.

So allow the redemption of adjudicated property that is otherwise just sitting on the tax rolls collecting dust, but you might want to remind the redeemer that the act of redeeming the property does not cause the property to be owned by that individual. If the individual redeeming the property is not the tax debtor, they should understand that the property will be redeemed in the name of the tax debtor. La. R.S. 47:2232 The parties (redeeming party and the tax debtor) can then work the matter out privately through a quitclaim deed, cash sale or, in many cases, probate. The redeeming party might also be a mortgagee who is redeeming the property to ensure that its interests are protected.

Political subdivisions need and want adjudicated property to get back into commerce so understanding that redemption is not a three year all or nothing concept for adjudicated properties is important!

The Louisiana Supreme Court heard oral argument in Central Properties v. Fairways, LLC on March 14, 2017. This case addresses post-sale notice to tax notice parties. When property is purchased at tax sale and the tax sale purchaser later moves to quiet the title, that fact that a tax notice party was not given notice of the sale can serve to nullify it. In 2008, the Louisiana Legislature enacted ACT 819 that served to overhaul the state statutory process related to tax sale and adjudicated property. La. R.S. 47:2156 provides for a post tax sale notice that the tax sale purchaser can send to the interested tax parties, including any parties holding a mortgage on the relevant property (mortgagees). That notice essentially tells the tax notice parties to redeem their property or face a situation in which the right to redeem will be terminated. Central Properties v. Fairways, LLC addressed the issue of whether the post-sale notice contemplated by state statute was sufficient to “cure” any lack of notice prior to the tax sale itself. The mortgagee did not get notice prior to the tax sale itself, but did receive the post sale notice from the tax purchaser. After failing to redeem the property as instructed by the post sale notice, the mortgagee filed suit. The lower court did not address the constitutionality of ACT 819, but did grant the mortgagee the right to redeem the property despite the post-sale notices. That decision was appealed to the First Circuit Court of Appeals in Louisiana where the constitutionality of provisions in ACT 819 that allow post sale notice to mortgagees to cure lack of pre-sale notice was questioned, but not addressed. The Court nullified the entire tax sale based upon the lack of post-sale notice to one of the mortgagees. The suggestion that pre-sale notice could not be cured by post-sale notice contradicted the decision in Adair Asset Managmeent LLC v. Turney made by the Second Circuit Court of Appeals that the failure to provide pre-sale notice was not an “absolute” nullity and could be cured by post-sale notice. Although adjudication sales in Louisiana are all non-warranty sales, the law continues to evolve and the Louisiana Supreme Court’s Central Properties v. Fairways, LLC will likely provide relevant guidance to political subdivisions regarding adjudicated property sales.