Relating to Real Estate

Hero Image for page

High Bidders at Tax Sales Must Pay the Bid Surpluses to the Property Owners

Kona Properties, Inc. v. W.D.B. Corp., Inc., 224 Md. App. 517 (2015), involved three consolidated cases with similar facts. In each, properties in Baltimore City were sold at tax sales and the Circuit Court for Baltimore City issued an order in each case foreclosing the right of redemption. The purchasers decided not to pursue the acquisitions of the properties, and the property owners sued to receive the surpluses of the bid prices.

In three separate cases, the Circuit Court for Baltimore City issued orders directing that assignees of the high bidders at the tax sales pay the bid surpluses to the property owners.

Baltimore City and the purchaser of one of the properties at a subsequent sale had moved to have stricken the judgments foreclosing the right of the property owners to redeem. The circuit court denied these motions. On appeal, the Court of Special Appeals found that the circuit court did not abuse its discretion in not finding good cause to strike the judgments.

The Court of Special Appeals also found that Hardisty v. Kay, 268 Md. 202 (1973), was still good law. Hardisty involved a similar set of facts as presented in Kona Properties. Hardisty, a tax sale purchaser, obtained an order foreclosing the right of redemption of the owner, but then desired to forfeit his deposit (the amount of outstanding property taxes) and not take a deed for the property and pay the balance of the purchase price. The Court of Appeals held: (1) a judgment foreclosing the right of redemption is binding on both the plaintiff and the defendant; (2) a property owner is entitled to have a court compel the high bidder to make the payment contemplated by the judgment that vested title to the property in the bidder; and (3) a money judgment in favor of the property owner does not create the possibility of a double payment because the tax collector must recognize the payment under a judgment of record.

In Kona Properties the Court of Special Appeals stated that the decision in Hardisty was not superseded either by the general recodification of the tax sale statute in 1985 or by amendments that the General Assembly made to it in 1998.

The appellants in Kona Properties included holders of mortgages secured by the properties sold at tax sale. The Court of Special Appeals ruled that a mortgagee of a property sold at tax sale could request that the circuit court issue a ruling requiring that the purchaser pay the bid surplus to the property owners.

Therefore, the Court of Special Appeals affirmed the orders of the Circuit Court for Baltimore City requiring that the holders of the tax certificates pay the bid surpluses to the property owners.

For questions, please contact Ed Levin (410) 576-1900.

Print

Date

01.28.16

Type

Publications

Authors

Levin, Edward J.

Related Legal Boutiques

Real Estate