An Indiana Supreme Court ruling reinforces the phrase “buyer beware” during tax sales, affirming that a purchaser at a tax sale who doesn’t seek a tax deed as required under Indiana Code is not entitled to a partial refund of the purchase price.
In the case In Re: Parcels Sold for Delinquent Taxes, Vanderburgh County Auditor et al. v. Michiana Campgrounds, LLC, 82S01-0701-CV2, the Supreme Court yesterday reversed the trial court’s grant of Michiana’s motion for a refund of the purchase price of three properties it purchased in a tax sale, minus a 25 percent penalty. Vanderburgh County refused to refund the money, arguing Michiana didn’t meet the requirements under Indiana Code to receive a refund.
Under Indiana Code, purchasers at a tax sale are able to receive refunds of the purchase price minus 25 percent of the price if the purchaser follows the requirements under Indiana Code to obtain a tax deed but are refused the deed by the court.
In this case, Michiana never attempted to ask for a tax deed on three of the properties it purchased before it asked for a refund of the properties, minus the 25 percent penalty. The county auditor refused to issue a refund because Michiana chose to not follow the necessary steps under Indiana Code to be entitled to the refund. Both the trial court and the Court of Appeals ordered Vanderburgh County to refund the purchase prices minus the 25 percent penalty, citing I.C. 6-1.1-25-4.6(d).
The county argued Michiana shouldn’t receive the refund because according to that statute, refunds are only granted if the purchaser has filed a petition for a tax deed. Because Michiana issued the first notice under section 4.5, but did not fulfill the requirements under section 4.6, Michiana should not receive a refund of any amount.
The Supreme Court ruled that tax sale purchasers have to make a “bona fide attempt” to comply with requirements under Indiana Code to obtain a refund. Because Michiana never applied for a tax deed, it couldn’t be denied one by the court, which would enable the company to receive the refund minus the penalty. “We think that the statutory reference to ‘refusal’ purposefully limits refunds to purchasers who go to the time and expense of seeking a deed. Buyer’s remorse is not a basis for a refund,” wrote Justice Theodore Boehm.