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COA affirms tax sale despite auditor’s noncompliance

July 25, 2017

An Indiana redevelopment company can move forward with its purchase of two Henry County properties at tax sale after the Indiana Court of Appeals determined the county auditor’s failure to comply with state statute did not invalidate the tax sale process.

After the owners of two parcels of land in Henry County became delinquent on paying their property taxes for those parcels, the Henry Circuit Court granted permission to the Henry County auditor and treasurer to sell the parcels at a tax sale. Lamasco Redevelopment, LLC, successfully bid on the land, known as Parcels 413 and 91, and was issued tax sale certificates from the auditor entitling Lamasco to the tax deeds for the parcels unless the owners paid the property taxes within a year.

Lamasco then sent notices of the tax sale to the property owners and advised them of the one-year payment deadline, but neither owner appeared or paid the back taxes. After the expiration of the one-year period, Lamasco then notified the owners it would petition the trial court to issue tax deeds.

The trial court granted both petitions and the auditor issued Lamasco the tax deed for both parcels in December 2016. However, the auditor then discovered it had endorsed deeds purporting to transfer the original property owners’ interests in their parcels to other persons in September and December 2016 for the parcels. However, no one paid back taxes for either property.

Thus, the auditor and treasurer moved to invalidate the tax sale as to both parcels and vacate the tax deed orders to be issued to Lamasco. The auditor and treasurer pointed to Indiana Code section 32-21-8-7 (2016), which they claimed barred auditors from endorsing the conveyance of properties that are subject to tax liens unless the property has been redeemed. Additionally, they claimed the auditor was unaware of the statute and had inadvertently violated it, thus compromising the legal integrity of the tax sale.

The trial court granted the motion without a hearing, invalidating the tax sale and vacating the orders for the issuance of the tax deeds, ordering the auditor to refund Lamasco all monies due by statute and directing Lamasco to restore ownership of the parcels to the previous owners. After Lamasco’s motion to correct error was denied, the company appealed, arguing the trial court erred in its decision.

In a Tuesday opinion, Indiana Court of Appeals Senior Judge John T. Sharpnack agreed with Lamasco and wrote that I.C. 32-21-8-7 holds that “unless the property of the delinquent taxpayer is redeemed during the redemption period, the tax sale process continues to its conclusion with the issuance by the auditor of a deed to the tax sale purchaser.”

Here, Parcel 413 was transferred by quitclaim deed in December 2016, outside of the one-year redemption period. Thus, the conveyance of the land was void, so the trial court’s decision to invalidate Lamasco’s tax sale purchase of that parcel and vacate the order for issuance of a tax deed was not supported by statute, Sharpnack said.

Further, though Parcel 91 was conveyed within the one-year period, neither the original owner nor the purchaser appeared in the case, and there is no statutory basis to stop a lawful tax sale process based solely on an auditor’s failure to comply with the statute, the senior judge wrote. Thus, the appellate panel reversed the trial court’s decision and remanded the case with instructions to reinstate the orders for the auditor to issue tax deeds for both parcels to Lamasco.

The case is Lamasco Redevelopment, LLC v. Henry County, Indiana, Auditor and Henry County, Indiana, Treasurer, 33A01-1702-MI-398.

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