Redeeming Property After a Tax Sale

When property is auctioned at a tax sale, what rights does the owner have?

One option is that the owner can redeem the property by paying the redemption price.

Under OCGA § 48-4-40(2), if a property owner wants to redeem the property auctioned at a tax sale, he or she must pay the correct redemption price  

The question now becomes, what is the amount that must be paid to redeem property from a tax sale?

As provided in OCGA § 48-4-1 et seq., “The amount that must be paid for redemption of property from a tax sale shall be the amount the purchaser paid for the property at the sale, plus any taxes paid on the property by the purchaser after the sale for taxes, plus any special assessments on the property, plus 20 percent of the amount for each year or fraction of a year that has elapsed between the date of the sale and the redemption date.”

The above-mentioned law specifies that there is a 20% penalty of the amount for each year or fraction of a year that has elapsed between the date of the sale and the redemption date; however, it is seems unclear whether the 20% would be applied to the amount paid for the property at the sale, or if the 20% penalty would also apply to any taxes or special assessments paid by the purchaser.. 

A 20% penalty imposed on the winning bid amount, as well as the amounts paid by the other parties for the auctioned property, would violate the Eighth Amendment's prohibition against "excessive fines". The imposition of financial penalties that bury people in mountains of debt has devastating effects on individuals, families, and entire communities, said Nusrat Choudhury, deputy director of the ACLU Racial Justice Program.

The above principle was applied by the court in Mark Turner Properties, Inc. v. Evans, 554 S.E.2d 492 (Ga. 2001). In the case, the parties were arguing over the correct redemption price. The purchase had paid $2,200.00 at the tax sale and $714.00 in taxes on the property. The court held that the trial court correctly included $1,760 in premiums in the redemption price, by applying the 20% annual premium in the present statute, for each of four years, to the $2,200 paid at the tax sale. The court did not include the taxes in calculating the 20% penalty. Below is a breakdown of the court’s calculations:

Purchase Price       $2,200.00   

(Paid by the successful bidder)                                                 

Taxes Paid             $714.00                                                        

20% Penalty          $1,760.00    (Twenty Percent of the Purchase Price) x (the number of years between the sale and the redemption (4 years))

Total                      $4,674.00   

In conclusion, the 20% penalty is imposed on the amount paid by the successful bidder on a tax sale, and not on the actual amount plus anything else paid by another party.