SALE OF LAND FOR COUNTY TAXES ONLY
Present law requires that when land must be sold for payment of delinquent county taxes only, it must be sold under the law regarding a tax lien for sale of property, the law regarding delinquent taxes, and the law regarding tax lien enforcement so far as they apply. The bill replaces the present law and, instead, requires that when a parcel is sold for payment of delinquent taxes, it must be sold pursuant to the law regarding a tax lien for the sale of property. This is procedural and remedial in its application and applies retroactively to the extent allowed by law.
SCHEDULES – LEASED PROPERTY
Present law provides that for the purpose of assessing leased property, it is the duty of the taxpayer to list fully on a schedule provided by the assessor all tangible personal property that is leased by the taxpayer for the conduct of the taxpayer's business. Present law requires leased property to include equipment, machinery, and all tangible personal property used in the conduct of, or as a part of, the taxpayer's business. The lessor, or owner of leased tangible personal property, must provide such information as the assessor may request regarding the location, valuation, or use of such property.
This bill provides that, subject to the present law above, each item of tangible personal property required to be listed on the schedule is subject to a first lien securing the property taxes, interest, and court costs as may be levied upon the total assessment of tangible personal property.
FILING AND PROSECUTION OF SUITS
Under the law regarding tax lien enforcement, present law requires the attorney to after February 1, and not later than April 1, file suits in the circuit or chancery court of the county for the collection of delinquent land taxes due the state, county, and municipality, as well as the interest, penalties, and costs attached to and a part of such taxes, which taxes, interest, penalties, and costs are declared a lien upon the land; and, for the enforcement of this lien, suits must be brought in the name of the county, in its own behalf and for the use and benefit of the state, municipality, or other tax entity that has certified a delinquent tax list, or in the name of any such tax entity that has certified a delinquent tax list, in its own behalf and for its own use and benefit.
This bill revises the present law above to, instead, require the delinquent tax attorney to, not later than the last business day of March following the publishing of a notice of intent to file suit, file judicial actions for the collection of delinquent real and personal property taxes due the county and municipality as well as the interest and costs attached to and a part of the taxes, which taxes, interest, and costs are declared a first lien upon the assessed parcels of real and personal property. The costs must include all expenses authorized by law or by the court, including attorney fees. The judicial actions must be brought in the names of the taxing entities that have certified a delinquent tax list with the delinquent tax attorney or the court.
NOTICE OF SALE OF LAND
Present law provides that a person, who is either expressly or impliedly authorized by another person to receive mail on behalf of the other person, is authorized to sign a receipt on behalf of the other person accepting registered or certified mail or correspondence delivered by an alternative delivery service, containing either a summons, complaint, or summary of the proceeding or a notice that has been or is to be filed in a tax proceeding. In every tax proceeding, the burden of proving by clear and convincing evidence that a person who signed such a receipt for a different person and was, in fact, at that time expressly prohibited in writing from accepting mail for the second person, must be upon the person challenging the sufficiency of the service or notice.
This bill adds to the present law above by authorizing proof of delivery of summons, notice, or other correspondence filed or to be filed in the proceeding, by certified mail, return receipt requested, or by an alternative delivery service with return receipt requested, to also be proved by reference to the tracking records located on the website of the delivery service. The failure of a person accepting the mail provided to fully complete the receipt with a legible signature, a printed name, and delivery date, creates a presumption that the receipt was executed by the addressee or a person with authority or implied authority to accept mail and service of process for the addressee. However, the presumption may be rebutted in the manner set out in the present law above.
Present law requires the delinquent tax attorney to make a reasonable search of the public records in the offices of the assessor of property, trustee, the register of deeds, and the local office where wills are recorded, seeking to identify and locate all interested persons as to each parcel listed on the county and municipal delinquent tax lists filed in the cause. The court must set a reasonable attorney's fee per parcel, per year of delinquent taxes owed, and per taxing entity, for the services required, which must become an additional expense of the proceeding and must be secured by the first lien in favor of the tax entity pursuant to the law relevant to taxes on which lien based. The fee must be charged to each pending parcel listed on the county and municipal delinquent tax lists filed in the tax proceeding and each parcel subsequently turned over for collection in a tax proceeding.
As used in the present law above, "proceeding" and "proceedings" means a judicial proceeding filed by a governmental entity for the purpose of collecting delinquent property taxes owing the entity or including the enforcement of the first lien securing such taxes. This bill revises this definition to, instead, mean a judicial proceeding filed by a governmental entity for the purpose of the enforcement of the first lien securing such taxes.
ATTACKS ON SALE OF LAND
Present law requires a person who buys real estate sold for delinquent taxes with a lien thereon and who fails to get a good title or to recover possession of the realty, to be subrogated to all liens that secured the taxes, and all interest, costs, penalties and fees; and such person has the right to enforce the same in chancery for the reimbursement of the purchase money paid by such person.
Present law provides that a tax deed of conveyance or an order confirming the sale is an assurance of perfect title to the purchaser, and no such conveyance must be invalidated in court, except by proof that the land was not liable to sale for taxes, or that the taxes have been paid before the sale or that there was substantial noncompliance with mandatory statutory provisions relating to the proceedings. If any part of the taxes for which the land was sold is illegal or not chargeable against it, but a part is chargeable, then that must not affect the sale, nor invalidate the conveyance, unless it appears that before the sale the amount legally chargeable against the land was paid to the county trustee, and no other objection either to the sale or the title must avail in any controversy involving them.
Present law prohibits a suit from being commenced in a state court to invalidate tax title to land until the party suing has paid to the clerk of the court the amount of the bid and all taxes subsequently accrued. A suit to invalidate any tax title to land must be commenced within one year from the date the cause of action accrued. The statute of limitations to invalidate the sale of any tax title is one year, except it may be extended to one year after the plaintiff discovered or with the reasonable due diligence should have discovered the existence of such cause of action. In no event must any action to invalidate any tax sale title be brought more than three years after the order confirming the tax sale.
Present law provides that in cases where the state is not the holder of the legal title to the property bought by it at a tax sale for delinquent taxes, any person desiring to attack the validity of such sale may do so by making only the holder of the legal or equitable title and those persons claiming through such holder who are parties to such suit.
Present law requires any person successfully challenging the validity of a tax sale of the person's interest in a parcel to also be responsible for any increase in the value of the parcel from the date of the entry of the order confirming the sale until the entry of a court order declaring the tax sale invalid as to the challenger. The challenger is responsible for all amounts expended by the purchaser or the purchaser's successors, if such amount is in excess of the increased value of the parcel.
Present law authorizes an interested person to file an action to challenge a tax title or the instrument conveying such title if the delinquent tax attorney fails to make a diligent effort to give notice of the proceeding. Any challenge to a tax title based on lack of notice to an interested party must be considered an action to invalidate the sale of a tax title and such action is subject to the provisions of existing law applying to actions to invalidate the sale of a tax title.
This bill provides that the present law relevant to attacks on sale of land does not presuppose a valid vestiture of title in the purchaser at the tax sale.
NEIGHBORHOOD PRESERVATION ACT
Under present law, the Neighborhood Preservation Act requires an owner of residential property to maintain the exterior of such property at a level that is no less than the community standards of the residential property in the area. That act applies to Nashville-Davidson, Memphis, Shelby County, Madison County, and any county or municipality that has formed a land bank pursuant to the Tennessee Local Land Bank Program. This bill clarifies that the Neighborhood Preservation Act does not apply to the following:
(1) Liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien;
(2) Tax sales conducted pursuant to the law regarding property taxes;
(3) Parcels sold or ordered by a court to be sold at tax sales; or
(4) A requirement or provision in the law relevant to taxes and licenses.
This bill provides that a receiver's lien created under the Neighborhood Preservation Act is secondary to a first lien securing property taxes.
Present law authorizes an acceptable petitioner to file a petition for a judgment in rem against a subject parcel, naming the subject parcel as the defendant and seeking an order that the subject parcel is a public nuisance and for the abatement of the public nuisance.
Present law provides that the filing of a petition for a judgment in rem creates a receiver's lien that secures an undetermined amount until the court establishes the amount. The precise amount of the receiver's lien must be established by the court at any time upon the request of any owner, interested person, or the receiver. The receiver's lien must be a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel. The acceptable petitioner must file for record in the county's register's office, amongst other things, a brief statement of the nature and amount of the lien sought to be imposed, all in compliance with existing law, which filing must act as a lien lis pendens against the subject parcel. This bill changes the present law by, instead, providing that the receiver's lien is a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel with the exception of liens securing the payment of property taxes as set out in the law regarding property taxes. The receiver's lien is secondary to the first lien securing property taxes.
Present law provides that the filing of a petition for a judgment in rem acts as a bar of any transfer of title of the subject parcel or of any interests pertaining to such subject parcel, including transfers by tax sale or other foreclosure, transfers or creation of lien interests in the subject parcel, or otherwise, from the date of the filing until the petition is dismissed or until specific orders of the court authorizing a transfer of title, if the petition has attached a certificate of public nuisance. This bill revises the present law by removing a tax sale from the list of transfers of titles.
Present law requires that if the receiver's lien is not satisfied by the owner, then the court must direct the receiver to offer the subject parcel for sale in accordance with certain conditions, including the following:
(1) The receiver must report the prevailing bid at the sale to the court, and upon approval by the court, a receiver's deed must be issued to the successful bidder and promptly recorded in the office of the register of deeds;
(2) The county trustee is allowed a credit pursuant to existing law for any local taxes and assessments that are not collected as a result of the failure of the receiver's lien sale to receive a cash payment for the minimum bid;
(3) Title must be absolute in the purchaser, and the interests of any interested persons prior to the auction must be terminated as of the date of the sale; and
(4) The receivership must be terminated after the sale by order of the court after a hearing on receiver's motion for termination of the receivership.
This bill deletes (1)-(4) above and, instead, adds as another condition that the sale procedures set out in the Neighborhood Preservation Act do not apply to tax sales conducted pursuant to the law regarding property taxes.
TENNESSEE LOCAL LAND BANK PROGRAM
Under present law, the Tennessee Local Land Bank program authorizes any local government to create a corporation to operate a land bank in order to facilitate the return of vacant, abandoned and tax-delinquent properties to productive use. This bill provides that the Program does not apply to the following:
(1) Liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien;
(2) Tax sales conducted pursuant to the law regarding property taxes;
(3) Parcels sold or ordered by a court to be sold at tax sales; or
(4) A requirement or provision in the law relevant to taxes and licenses.
Present law provides that a local government has the authority to create a corporation that is authorized to operate a land bank within the jurisdictional boundaries of the local government establishing the corporation.
This bill provides that the corporation has the power, as limited by the legislative body of the creating local government or local governments, to bid at a tax sale conducted pursuant to the law regarding property taxes, subject to the same procedures and requirements applicable to other bidders. In addition, the corporation may negotiate and complete purchases and leases of parcels purchased at tax sales by counties and cities, subject to the same procedures and requirements applicable to other governmental entities.
Present law authorizes the corporation to provide written notice to the clerk and master in advance of a delinquent property tax sale auction held that it wishes to enter the minimum bid for cash for any parcel advertised for sale in such auction, and such minimum bid preempts all other bids for the parcel, and the local land bank must be the prevailing bidder. If there are no other bidders on a parcel, then such minimum bid must be accepted for no cash, and the local land bank must be the prevailing bidder and take title to the parcel in the same manner as a municipality bidding the minimum bid. This bill deletes these provisions.
Present law provides that commencing upon the date of transfer of any real property from a land bank to a taxable person or entity, if approved by local government, then the land bank is entitled to receive payments from the local government equal to 50 percent of real property taxes collected by the local government for a period of five years.
Present law provides that the corporation has the power to pay any unpaid taxes due and owing by the owner of record of the real property, or make any government mandated improvements to the property, in exchange for the deed of real property to the corporation. This bill provides that the corporation has the power to pay any unpaid taxes due and owing by the owner of record of the real property, or make any government mandated improvements to the property, without having to exchange the deed of real property with the corporation.
SALE OF PROPERTY – POLITICAL SUBDIVISION AS PURCHASER
Present law provides that a county, city, town, taxing district or other municipal corporation in Tennessee is authorized to bid on property sold for nonpayment of taxes or assessments levied against the property, or to enforce the lien of taxes or assessments levied against such property, upon which property such entities may have a lien for taxes or assessments, and to buy at such sale. Such entities are authorized to bid excess amounts authorized by the county legislative body, or the legislative council or other governing bodies and to execute such notes for any part of the purchase price of such property as may be authorized by the county legislative body, or by the legislative council or other governing bodies.
Present law provides that if at any sale of property for taxes or assessments levied against the property, or for the enforcement of the lien of such taxes or other assessments, any county, city, town, taxing district or other municipal corporation is the successful bidder and become the purchaser of such property at any such sale, then it is expressly authorized to take credit on any note or other evidence of indebtedness executed as all or part of the purchase price of such property for any taxes or assessments against the property, owed to such entity. Such entity is exempted from furnishing any security for payment of any such notes or other evidence of indebtedness for all or any part of the purchase price of any such property. Any county, city, town, taxing district, or other municipal corporation, having become a purchaser at a tax sale, or having otherwise acquired real estate, may fully discharge the lien or liens of delinquent taxes of the state that have priority or are superior to its lien for taxes, by paying the clerk and master or clerk conducting such sale.
Present law authorizes the municipality to, upon determining it impracticable to sell the property for the full amount of the taxes, penalty, cost and interest, sell the property for less than this amount. This does not apply in any county except for Davidson County, Shelby County. The municipality may decide to retain ownership and possession of such property.
Present law provides that upon the purchase of land by a municipality or by a county at a delinquent tax sale, after the period of redemption has lapsed, when both municipal and county taxes are delinquent:
(1) The municipality may sell the property for less than this amount;
(2) Any resulting revenue from such tax sale must be apportioned to the municipality and co