Mississippi Tax Deeds

Mississippi real estate taxes are paid in arrears and become due in January of each year. They are considered delinquent if not paid prior to the first of February by the owner or a party having interest in the property. If, however, they are not paid, Mississippi law authorizes taxing authorities to sell the delinquent property tax obligations to the highest bidder at public auction.

At auction, the successful bidder receives a tax certificate (receipt) for the property. The certificate grants its holder a priority lien on the underlying property without the right of possession; however, if at anytime prior to the expiration of the redemption period, the original owner pays the delinquent tax obligation in full, including payment of taxes, interest, and penalties that are due, the clerk will issue a tax sale release that relinquishes all interest that the tax purchaser and/or government entity may have previously held in said property. At that point the taxing authority remits, where applicable, to the tax certificate purchaser, the purchaser’s original principal purchase price plus the statutory rate of interest. The tax certificate purchaser’s right to obtain a tax deed conveyance to the property is subject to the original owner, or parties in interest, redeeming the delinquent tax prior to the expiration of the redemption period.

So let’s review the process leading up to the issuance of a tax deed. After a tax lien/tax certificate is auctioned by a taxing authority to the highest bidder at a tax certificate auction, one of two things will happen: First and most likely, the tax lien or tax sale certificate will likely be redeemed before the expiration of the redemption period. The statutory period for redemption expires, at least in theory, two years from the date of the tax sale. However, a number of taxing authorities will allow redemption after that point. In the second less likely scenario, the property is not redeemed and the statutory redemption period expires. At that point, the tax purchaser will, upon request and payment of the statutory issuance fees and expenses, be issued a city or county tax deed, [in the event that both a city and county tax deed is issued on property unpaid property taxes for the same tax year, the general statutory interpretation is that county deed would take precedence over a city tax deed], depending on which taxing authority conducted the initial tax certificate auction. Expiration of the redemption period confers, at least in theory – but not in practice - the right of possession to the tax deed holder. Moreover, the statute, at least in theory, views the issuance of a tax deed as conclusive evidence of the purchaser’s rights in the property. From the time the redemption period expires, the purchaser has all the authority, rights and obligations of any other landowner, including the right to immediately possess the property. Nevertheless, in practice, great caution is urged to tax deed holders wishing to take possession of a parcel that is currently occupied or where other adverse claims by third parties exist. Thus, while in theory a holder of a valid tax deed can use any legal remedy to evict occupants as well as to protect and secure his or her legal rights and interest in and to the tax deed property; in practice, most courts look upon tax deeds with great disdain and may choose not to grant relief to the tax deed holder unless a tax title confirmation suit has been properly filed and successfully concluded by the tax deed holder.

In tax certificate research and acquisition the old adage that location, location, location is of importance, however, of equal and often greater importance is proper notice. With that in mind, always remember that proper notice is a fundamental right afforded by our legal system and is an important part of “due process.” Due process, as characterized by proper notice, may not be denied to anyone. Property owners of record, lien holders, creditors, heirs, mortgage holders and trustees, to name only a few, are called parties in interest. The statute demands that all parties be notified by publication, certified mail, and/or personal service by a representative of the sheriff. If parties in interest are not notified in strict accordance with state statutes, then one of two things may happen. First, a tax certificate buyer may find that upon requesting the issuance of a tax deed, the taxing authority may unilaterally refuse to issue said deed claiming notification problems and may instead simply refund the original tax certificate purchase amount, often without interest. The wholesale voiding of tax certificates happens more often than not. Unfortunately, a tax certificate purchaser faced with such a conundrum has little cost effective recourse against a taxing authority that did not afford proper notice. Yes, the law does state that you can go against their official bond; well, just try that and see how far you get. Those are clear instances of caveat emptor, “let the ‘tax’ buyer beware.” Just learn from those events, chalk them up to experience, and move on. Second, if the tax deed has already been issued and recorded, you may be forced to deal with a party in interest in an attempt to negotiate a re-conveyance of their interest back to them. If, however, you decide not to deal with them and choose instead to be greedy and hold out for some large settlement amount, you may very well find yourself defending yourself in costly and protracted lawsuit to set aside your tax deed interest.

Keep in mind that when dealing with tax certificate and tax deed matters involving statutory interpretation, negotiation or litigation, it’s imperative that you seek out experienced counsel with hands on experience in that area. As an attorney and former active tax purchaser, I can tell you with great certainty that chancery judges, as a matter of practice, look with great distaste when confronted with an individual’s loss of property through the issuance of a tax deed. Such courts most often tend to construe all statutes to the utmost advantage of the parties who have lost their property through delinquent taxes. My advice to you then would be, when faced with a potential challenge to one of your tax deeds, work through experienced counsel to diligently to craft a creative and mutually beneficial resolution to the matter. If at all possible, don’t let the issue escalate into a lawsuit.

In the event where a clear showing is made that a party in interest has been afforded proper statutory notice, that party, at least in principal, loses their ability to reclaim any interest in the tax deed property. If no other parties in interest exist, or if they too received proper notice, the tax deed holder may well be able to prevail in a suit to confirm title. Nevertheless, even if you can demonstrate that proper notice was given this does not bar a party in interest from filing a court action to set aside the tax deed or to filing a response to a suit to quite title, thus requiring you to launch a defense. If in fact you are taken to court, regardless of how good your notice is, your claim will be closely scrutinized by a chancery court judge. So don’t automatically think you have it in the bag. Regardless of how in the right you think you are, you could be faced with an expensive and uphill battle.

Let me once again make a personal observation. Rare is a tax deed that could withstand extreme legal scrutiny when challenged. Does this mean that the validity of all tax deeds will be questioned; no, not at all. Quite the contrary, my experience has been that the validity of tax deeds is challenged in only a small percentage of cases.

In summary, every prudent tax deed purchaser must remain mindful that all parties having a legal and/or equitable interest in a tax deed property, including but not limited to, property owners, mortgagees, lien holders, creditors, and heirs must be given proper statutory notice and may, at any time, initiate a cause of action to recover their interest. These parties are entitled to know that the property in which they hold an interest has not only been sold for taxes, but that a tax deed will be issued if the delinquent taxes are not redeemed before the expiration of the statutory redemption period.

Property inspections, where possible, and to the extent allowed by law, coupled with a title search conducted by a qualified attorney will help you garner the necessary information upon which to base further research and buying decisions. This type of fundamental due diligence is the key element to the tax deed research equation and should never be ignored. Based on the aforementioned you can probably see why it’s in your best interest to do all of your homework before purchasing a tax certificate or tax deed.

Successful tax deed buyers are those who, more often than not, properly research a tax certificates or tax deeds before buying. By properly researching all the facts surrounding a tax delinquent property, these individuals are generally better able to maximize their profits while minimizing their losses. Clearly that kind of research could add up to a significant investment of time and money, however, keep in mind that an informed purchaser almost always, over time, does better than a gambler. When making any type of acquisition, you should always do your homework. Research, research, research…that is to say the lack or presence of it, is often a leading indicator of how profitable or unprofitable one’s tax certificate, property tax auction, or tax deed purchase will be.

Laziness, ignorance, and failure to research on the part of delinquent tax certificate and tax deed buyers is often the cause for less than an ideal property tax auction or tax deed buying experience. Why? Well, human as we are, many of us simply are not willing to apply ourselves and do the necessary homework. Granted, one may, on occasion, get lucky by following others, a hunch, a rumor, or by taking shot in the dark here and there, but in the long run, it is only through patience, thorough research, hard work, and perseverance that delinquent tax buyers become may become successful.

Unless you know what you are doing, throwing your money to the wind in the purchase of delinquent property taxes, tax certificates or tax deeds in hopes of gaining big returns is misguided and potentially a good way to waste a lot time and potentially lose a bunch money or, at the very least, minimize your returns. Thus, if you only take one thing with you from this summary, it should be that if you are gambling on success, you would probably have more fun and possibly better odds visiting beautiful Biloxi, Mississippi, my home, and putting your dollars to work in the slot machines or at the tables in one of our many beautiful casino resorts.

Many an unlucky tax certificate or tax deed purchaser has discovered, much too late, that because a tax deed was not properly researched, it has been subject to things such as state and federal tax liens, bankruptcy filings, unsatisfied mortgages, environmental and wetland problems, improper legal descriptions, heirship challenges, clean-up assessments, demolition liens, double or improper assessments, improper descriptions, faulty publication, insufficient notification and/or suits to set aside tax deeds due to improper sale, to name only a few. In the final analysis, although fundamental due diligence, prior to tax deed acquisitions, property inspections and title searches, does not guarantee a successful tax deed purchase, they certainly increase one’s odds of building a quality base in tax deed property holding.

T. Mitchell Kalom of Kalom Law Firm, PLLC has over twenty years of in-depth experience with issues relating to Mississippi tax sales, tax certificates, and tax deeds. We stand ready to assist you with any legal questions or needs you may have in this area. Contact us.

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