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Are Judgment Liens Wiped Out at a Tax Deed Sale?

Sovran Law May 3, 2024

Dealing with the complex legal issues of judgment liens and tax deed sales can be stressful and confusing. For Georgia real estate investors and property owners, these terms are not mere legalese; they impact the bottom line and the very asset at the core of their endeavors.  

As your legal team, we can untangle the legal intricacies surrounding these topics and provide insightful strategies for safeguarding your financial interests. 

The collision of tax deed sales and judgment liens can often be a make-or-break moment for stakeholders. On one hand, you have property owners looking to dispose of a tax liability, and on the other, creditors seeking to recoup unpaid debts. In Georgia, this narrative plays out in a high-stakes legal performance, and understanding the roles of judgment liens and tax deed sales is crucial. 

Understanding Judgment Liens 

A judgment lien is a type of non-consensual lien that attaches to property when a creditor obtains a court judgment against the owner that involves monetary payment. The judgment is essentially a public record, alerting creditors and potential property buyers to the debt. It’s a powerful tool for creditors looking to secure payment. 

Judgment liens cloud the title of the property and can hinder the sale or refinancing process. Lienholders must be satisfied before the transfer of clear title can occur, making them a priority consideration for anyone involved in real estate transactions. 

While judgment liens are often recorded after a court hearing, their impact on real estate is akin to that of statutory and voluntary liens. However, they generally take precedence over liens that are recorded after them, giving them a distinguished place in the hierarchy of property liens. 

What Are Tax Deed Sales? 

Tax deed sales, often used to recoup unpaid property taxes, involve the public auction of property. In Georgia, after a tax sale, the previous owner is typically entitled to a redemption period during which they can pay the owed taxes, interest, and penalties to reclaim the property. 

In the pursuit of reclaiming lost tax revenue, the state employs the mechanism of tax deed sales. But what exactly does this process entail?  

The primary objective of tax deed sales is to sell properties in which the owner has failed to pay property taxes and redeem the property. This is a means for the government to collect the outstanding taxes efficiently. 

The tax deed sale process in Georgia involves notifying the owner of the impending sale, advertising the sale to the public, and conducting a public auction to sell the property to the highest bidder. The funds from the sale are used to satisfy the tax debt and any additional expenses associated with the sale. 

Are Judgment Liens Wiped Out at a Tax Deed Sale? 

In the majority of cases, judgment liens do not survive a tax deed sale. Upon completion of a tax deed sale, the property is transferred to the new owner free and clear of most liens, including judgment liens. 

While the rule is generally favorable for new property owners, certain judgment liens, including those for federal taxes and certain non-ad valorem assessments, may survive a tax deed sale. It’s important for investors and property owners to be vigilant about potential exceptions that could leave them exposed to unforeseen debts. 

For previous owners, it may be a chance to unburden themselves from a property with significant tax debt. For investors, it’s an opportunity to acquire a property unencumbered by judgment liens that may have dissuaded others from bidding. 

Strategies for Dealing With Judgment Liens at Tax Deed Sales 

To mitigate the risks associated with judgment liens, stakeholders must adopt a proactive approach. From due diligence in pre-sale research to seeking professional guidance, several strategies can be employed. 

Conduct Thorough Lien Research 

Before engaging in a tax deed sale, potential buyers should thoroughly research existing judgment liens on the property. This can involve combing through court records and property filings to identify and understand the scope of any outstanding debts. 

Seek Legal Advice 

Working through judgment liens and tax deed sales requires specialized knowledge. Seeking legal counsel with expertise in real estate law and tax sales can clarify complex legal matters and prevent costly oversights. 

Steps to Clear Judgment Liens 

For property owners and buyers looking to clear a judgment lien, options including paying off the debt, negotiating a settlement, or filing for bankruptcy may offer a resolution. Each avenue presents distinct challenges and should be approached with a combination of legal and financial planning. 

How Sovran Law Can Assist You 

At Sovran Law, our team is dedicated to serving clients throughout Georgia in their real estate legal matters. From transactional advice to litigation support, we provide comprehensive services designed to safeguard your interests and streamline the legal process. 

Contact a real estate attorney in Cobb County, Georgia, today to learn more about how our experience can benefit you in the areas of judgment liens and tax deed sales. Whether you're a real estate investor or property owner, we're committed to delivering the thoughtful, strategic legal counsel you need to succeed in your real estate endeavors.  
 
Our location allows us to also serve clients throughout Georgia, including those in Atlanta, Marietta, Athens, Augusta, Savannah, Macon, Columbus, and Brunswick.