What is a Tax Deed? -South Carolina Law provides a mechanism for your County Tax Collector to seize and sell real estate to collect unpaid county taxes owed by the landowner. Under this statute, seized real estate can be sold by the Delinquent Tax Collector in a public auction. The high bidder at the auction will receive a Deed from the Delinquent Tax Collector provided, however, that the taxpayer has not redeemed the property by paying the taxes (and other penalties) in full within one year of the sale. The Deed that the highest bidder receives is often referred to as a “Tax Deed” Is a Tax Deed a Real Deed? - A Tax Deed is certainly a “Real” Deed; however, it may not be an indication of ownership free of the claims of others. Potential valid claims of others against the real estate sold at a tax sale are often referred to as “clouds on title. Does a Tax Deed Indicate a "Good" Title? - The idea of “Good Title” typically refers to the ability to mortgage the property or to sell the property for full value to someone who intends to mortgage it. Whether or not property can be mortgaged (or in some cases sold) is usually determined by whether a title insurance policy can be issued on the property. Thus the terms “marketable title” and “insurable title” mean that the property can be sold and mortgaged free of “clouds” or claims because a title insurance company is willing to insure the title in the name of the new owner and/or for the benefit of a mortgage holder. A Title Insurance policy insures land
ownership against the claims of others. Typically a Tax Deed is uninsurable and therefore unmarketable for the first ten years after its issuance. Although South Carolina law provides that claims by the previous owner (the nonpaying taxpayer) are extinguished by statute two years after the tax deed is issued, State Courts welcome challenges to Tax Deeds by others during the first ten years. Because of this statute, most title insurance guidelines prevent underwriters and agents from issuing a title insurance policy during the first ten years after the Tax Deed has been issued unless the potential claims of previous owners (and others who may have had some interest in the land) are extinguished by a Court Order. A Court Order removing the clouds on title can only be obtained through a lawsuit brought to “quiet” the title. A “Suit to Quiet Title” or a “Quiet Title Action” puts the previous owner and any others who may have an interest in the land on Notice of the intention of the new owner to extinguish their claims. The lawsuit gives those people an opportunity to and be heard and raise any claims they may have. Only after a hearing before the Master in Equity can their claims be extinguished in favor of the new owner. Should I Bring a Quiet Title Action Regarding My Tax Deed? - This information is being provided to you because public records indicate that you have purchased property at a tax sale and have received a Tax Deed. The exact nature of your legal situation will depend on many facts not known to me at this time. You should understand that the advice and information in this communication is general and that your own situation may vary. You may wish to consult your lawyer or another lawyer instead of me. You may obtain information about other lawyers by consulting the Yellow Pages or by calling the South Carolina Bar Lawyer Referral Service at 799-7100 in Columbia or toll-free at 1-800-868-2284. If you have already engaged a lawyer in connection with the legal matter referred to in this communication, you should direct any questions you have to that lawyer. How does the County sell property for taxes? - Each County is empowered to collect taxes on real and personal property by virtue of the South Carolina Constitution Article X, Sections 1, 4 and 6. Furthermore, Counties are given statutory authority to seize and sell property to collect unpaid taxes. What is an ad velorum tax? - Ad velorum is Latin for "according to value." Simply put, the County assesses real property according to its value for the purpose of Taxation. What does the County have to do to sell property? - Each County can seize and sell real property by strictly following the statutory requirements found in South Carolina Code Sections 12-49-10 through 12-49-330 and Sections 12-51-40. What can a person do to recover property lost at a Tax Sale? - The Defending Tax Payer can bring an action in State Court to overturn the Tax Sale and set aside the Tax Deed. Because "strict compliance" with the Statutory Scheme is required by the County, the defaulting taxpayer must show some irregularity or mistake in the Tax Sale procedure. Is there a 2-Year Statute of Limitations for the defaulting taxpayer to challenge the Tax Deed? - Yes and No. We have a statute in South Carolina that says a Tax Deed cannot be challenged after 2 years have passed from the Date of the Tax Sale. This Statute is practically worthless because ore State Recognizes challenges to Deeds for up to 10 years according to a different Statute. State Courts will welcome challenges to Tax Deeds for up to 10 years. Federal Courts might allow a challenge to a Tax Sale beyond 10 years based on a claim of a violation of the due process provisions of the United States Constitution.
If you have lost your property to a Tax Sale, it is important that you seek legal advice immediately. Your rights regarding the sale are subject to very short statutes of limitation. Tax Sales can be over-turned or set aside under certain cicrumstances thereby restoring your ownership as it was prior to the sale.
To purchase a Book on the law of Tax Sales from the South Carolina Bar, follow this link:
