If you don’t pay your taxes in Georgia, your home can be sold at a tax sale faster than you can say “speeding bullet.”
Tax Sales, Redeeming the Property and Surplus Funds
As the property owner, you have one year after the property is sold to compensate the purchaser at auction and pay him/her/it the tax sale price (20 percent of the sale price.)
But what happens if you can’t pay the auction sale price plus 20%?
Then you won’t be able to get back your home, but you can apply to the receive any “surplus funds” from the sale.
“Surplus funds” are excess funds realized from the sale of the property. In other words, “surplus funds” are the difference between the amount you owed in taxes, fees and penalties (let’s say, it was $14,000) and what the property sold for at auction (let’s say, $200,000).
That is, unless your rights are knocked out by a “super lien.”
What’s a super lien?
“Super lien” refers to a statutory lien that is superior to all existing liens and all later-filed liens on the same property. In Georgia, a super lien allows a second lien holder to foreclose in weeks instead of months, effectively foreclosing on a homeowner’s time to redeem his/her property. And the second lien doesn’t even have to be related to the property. It can be something as remote as a medical bill. As long as it was an unpaid debt, (until recently) a redeeming creditor could take advantage of a loophole in the Georgia foreclosure laws which allowed creditors to redeem the property and acquire the surplus funds if the homeowner couldn’t pay off the second lien quickly enough.
This practice resulted in investors who bought at the tax sales colluding with the second lien owners to drive up the auction sale price of the home. This made it more difficult for homeowners to redeem their properties. The second lien-holder creditors would then apply to the government for the surplus funds themselves. Thus, the super lien allowed creditors to take not only the foreclosed upon home, but any excess funds as well.
That is, until 2018.
The Demise of the Super Lien in Georgia
In 2018 the Georgia Supreme Court ruled that a redeeming creditor could not claim a priority lien against the excess funds. This ruling still allows lienholders to do everything they could before —except for obtaining surplus funds.
Protecting Your Real Property Rights
At the Law Offices of Mark Weinstein, P.C., our clients benefit from our experience and expertise in all aspects of real estate. For over 30 years we have dedicated ourselves to only one thing: protecting your property rights. If you are facing foreclosure or have any other real estate matter, call us. We have offices in Cumming, and we serve clients in Atlanta, Gainesville, Gwinnett County, Bartow County, Hall County, Henry County, Cherokee County, Clayton County, Cobb County, and other counties throughout Georgia. To schedule your free phone consultation, call us at: 770-888-7707. Or you can e-mail us with inquiries at: firstname.lastname@example.org.