Why You Should Confirm Your Tax Title
We don’t recommend simply quieting your Arkansas tax deed. Purchasers must either confirm the Land Commissioner’s sale or quiet title to their property before being able to offer or sell marketable title to their properties. In most cases, we prefer to do BOTH in the same action. So what’s the difference between these two methods of establishing title? Aside from a few minor differences in procedure, the primary difference between these two methods is the different statutes of limitations which limit the amount of time the tax delinquent owner or other interested person may contest your purchase. The next difference pertains to the methodology a claimant must use to set aside the sale. These two distinctions show just how important it is to “confirm” every tax sale. In fact, you can and should do both. The following summary explains why.
STATUTES OF LIMITATIONS
In Arkansas, there are two potential avenues for quieting title or confirming title in tax delinquent lands. The “standard” quiet title action filed pursuant to Ark. Code Ann. 18-60-501 is generally used in quiet title cases not involving tax sales, but can be used in that way. Quiet Title actions filed under subsection 501 still permit persons to set aside the sale within three years (or longer for certain persons). Further, any person who has paid the property taxes within the last seven years and who was NOT made a party to the action may contest the sale within seven years. By contrast, quiet title actions filed pursuant to Ark. Code Ann. 18-60-601, reserved specifically for tax parcels, contains no specific statute of limitations, but this subsection specifically states that the decree “shall operate as a complete bar against any and all persons who may thereafter claim the land in consequence of informality or illegality in the proceedings.” Ark. Code Ann. 18-60-608. Neither statute bars a by persons under certain disabilities, but section 608 limits those actions to one year after the removal of the disability whereas section 510 allows a full three years following that date.
By contrast, an action to CONFIRM a tax sale or tax title allows only a very short period of time within which a person may contest the sale or decree. The delinquent tax debtor may only “redeem” the property within twenty days of the sale, subject to a few exceptions. If the property is not redeemed, the debtor or any person with an interest may file a suit contesting the sale within ninety days of the date of the conveyance, again subject to a few exceptions for minors, persons with disabilities, and certain persons serving in the military during a time of war. Ark. Code Ann. 26-37-203. Further, even if a person or entity receives no notice of the quiet title / confirmation action and is not properly served, as long as the action involves a claim to confirm the sale, the claimant is permitted only one year (if a notice of decree entry is posted and an affidavit stating so is filed) or three years from the date that the decree is entered if no such notice is posted.
SETTING ASIDE SALES
Assuming the statute of limitations has not run, an interested person can file suit to set aside the sale. To maintain a claim, the claimant must establish that he or she did not receive proper notice of the Land Commissioner’s sale or that the taxes were paid and the land should not have been sold. The most difficult obstacle to overcome, however, is the obligation to offer to pay certain amounts to the purchaser or pay a “bond”. To contest the sale, the petitioner must first with the clerk an affidavit setting forth that the claimant has tendered to the purchaser the full amount of all taxes and costs first paid on account of the lands, with interest thereon at the rate of one hundred percent (100%) upon the amount first paid for the lands and twenty-five percent (25%) upon all costs and taxes paid upon the land thereafter, from the time the costs and taxes were paid, and also the full value of all improvements of whatever kind and description made on the lands, by the purchaser or purchasers, his or her heirs or assigns, or tenants, and that it has been refused. Ark. Code Ann. 18-60-212. The obligation of the petitioner or claimant to “tender” these funds or supply this bond can be a major obstacle, especially given the high interest rate.
In my experience, claims to set aside tax sales are very rare, but they do happen. If a claim is filed, we ALWAYS demand that the claimant tender the money discussed above. In some cases, clients may choose to accept this “tender” because they can make a substantial interest rate on their purchase. In other cases, a client may wish to keep the property. In those cases, we ask that the claimant pay this “tender” into the court’s registry. In this way, we can be assured that the money will be available in the event that the sale is set aside.
By: J. Greg Brown, Attorney at Law
Harrington, Miller, Kieklak, Eichmann & Brown, P.A.
MORE RELEVANT STATUTES
18-60-212. Recovery of lands held under tax title
18-60-510. Setting aside decree
