Also known as: tax foreclosures · tax sale · tax lien foreclosure
Written by attorneys · grounded in primary & secondary sources — see below
A statutory procedure by which a governmental authority seizes and sells real property to collect delinquent taxes. Title passes by operation of law without a deed from the prior owner. The purchaser at the sale receives a tax deed that conveys marketable title subject only to limited statutory redemption rights.
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Tiana Tan fell behind on property taxes assessed against her vacant lot. The county conducted a tax foreclosure sale at which Theodore Tucker purchased the parcel and received a tax deed. Title vested in Tucker without any deed from Tan because the sale effected a transfer by operation of law.
A church failed to pay taxes after its exemption was revoked. The city initiated tax foreclosure proceedings that would have required valuation of the sanctuary and possible seizure. Church leaders argued the process would produce excessive government involvement with religion.
A religious publisher challenged a state sales-tax exemption that excluded religious periodicals. The state defended the exemption by noting that taxing churches would lead to tax liens and foreclosures. The litigation examined whether the exemption avoided unconstitutional entanglement.
Grable & Sons sued to quiet title after a federal tax sale purchaser recorded a deed. The former owner claimed the IRS sale was invalid under federal notice rules. The dispute centered on whether federal tax foreclosure procedures supplied the governing law.
An estate creditor received no personal notice of a tax foreclosure sale on estate property. The sale proceeded by publication alone. The creditor later challenged the resulting tax deed on due-process grounds.
No. Under the Restatement illustration, a mortgagee retains its lien after a tax foreclosure sale even when the mortgagor purchases at the sale. The tax sale transfers the mortgagor's interest but does not destroy senior liens unless the mortgagee received proper notice and an opportunity to redeem.
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Yes. Due process requires notice reasonably calculated to reach interested parties whose names and addresses are reasonably ascertainable. Publication alone is insufficient when the mortgagee can be identified from public records.
…of exemption would tend to expand the involvement of government by giving rise to tax valuation of church property, tax liens, tax foreclosures, and the direct confrontations and conflicts that follow in the train of those legal processes. Granting tax exemptions to churches necessarily operates to afford an indirect economic…
…any such sale during which the owner or any
…unacceptable government entanglement with religion. In fact, quite to the contrary. Since the exemptions avoided the "tax lien
…Justice Souter The question is whether want of a federal cause of action to try claims of title to land obtained at a federal
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The law of the situs state controls. A federal court must apply the property rules that courts of the state where the land is located would apply to determine whether the tax sale effected a valid transfer by operation of law.
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Generally no. A purchaser at a tax-foreclosure sale takes subject to an appurtenant servitude that was recorded before the tax lien arose. The burden runs to the foreclosure purchaser unless the covenant itself or a superior-title exception provides otherwise.
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A tax foreclosure breaches the landlord's obligation when the tax-sale purchaser asserts paramount title and evicts the tenant on or before the possession date. The tenant may then terminate the lease and recover damages from the landlord.
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