Mississippi Tax Lien Foreclosure Voided: Tax Sale Ineffective

Mississippi Tax Lien Case: A procedural error in a tax sale resolves in favor of the original landowner

I posted yesterday on the Mississippi tax sale and tax lien process and how tax sales are generally disfavored by the courts.  In my experience, if a court can find a reason to invalidate a tax sale, it will.  It is important for tax lien attorneys who represent tax lien purchasers to follow the formalities to the tee.  And it is important for tax lien attorneys who represent owners to know the formalities well enough to bring a successful challenge.

To illustrate the importance of strict adherence to the tax lien requirements, I want to look at a recent Mississippi appellate case involving the issue of notice and whether the court’s failure to execute an affidavit detailing due diligence in serving notice voided the tax deed granted to the purchaser.   Roleh, Inc., lost its commercial property in August 2004 after failing to pay their 2003 real property taxes. The property was sold at a tax sale to an investment group called Maitland Investors. In December 2004, after the sale of the commercial property, the Mississippi Secretary of State administratively dissolved Roleh At the time of the dissolution, the registered agent for Roleh was T.N. Roberts, who died in 2003.

By 2006, the commercial property had been sold by Maitland and ended up in the possession of C.F.P. Properties, Inc. Two years after the tax sale, Roleh had failed to redeem the property and the clerk of the Chancery court mailed notice of the final sale to Roleh. Notice was returned to the court with the message that Roleh was no longer at the address that had been on record with the Secretary of State.  The clerk then published notice in the newspaper announcing the expiration of the tax redemption period. Another written notice was sent to Roleh and it too was returned. It is alleged that the clerk filed an affidavit reciting the attempts at providing notice to Roleh. However, the affidavit was not in the tax-sale record.

Roleh filed to have the sale of the property voided based on the fact that the affidavit proving notice was not in the official tax sale records regarding the property.  The lower court found in Roleh’s behalf, holding that the lack of an affidavit by the court documenting attempts to provide notice was sufficient grounds to set aside the tax sale.  On appeal, the Court of Appeals affirmed the lower court’s holding and voided the final sale of the commercial property. The Court of Appeals stated that the policy in Mississippi is to favor and protect the original landowner from sale of land for failure to pay taxes.

C.F.P. Properties, Inc. v. Roleh, Inc., NO. 2009-CA-00391-COA.