Saturday, June 23, 2007

Nebraska Supreme Court favors tax deed holder over trust deed purchaser's competing claim.

Ottaco Acceptance, Inc. v. Larkin, A-05-854

A tax certificate holder who takes a tax deed in accordance with Section 77-1837 is the owner of the property and not just a lien holder. The tax certificate holder elected to take a tax deed instead of foreclosing with the certificate. See 77-1902 {procedures to seek judicial foreclosure of the properties subject to tax certificate}. A purchaser from the trust deed holder's auction recorded his deed one day before the tax deed was recorded. Douglas County District Court ruled in favor of the tax deed holder and the Supreme Court affirms. A competing claimant to the property must comply with §§ 77-1843 and 77-1844 to challenge the title of an owner who gained title through a tax deed even if the tax deed holders title is void or voidable. Therefore one challenging the claim under a tax deed must show that he was the owner of the property and the time of the tax deed conveyance; that there were no taxes due; and that the tax deed was defective. Although the Supreme Court agrees that the trust deed buyer could claim title to the property and that the former owner had tendered payment of the taxes to the Douglas County Treasurer, the Court rejects the trust deed buyers claim that the tax deed was defective for not notifying the original owner, for not having a legible seal, and for not following a "formalistic" procedure of taking the original certificate from the County, then giving it back to him.

No comments: