Register for Newsletters by emailInvestors Title Company Newsletter PageInvestors Title Insurance Company, North Carolina Newsletter PageInvestors Title Exchange Corporation Newsletter PageInvestors Title Commercial Services Division Newsletter PageInvestors Trust Company Newsletter Page“Certainty? In this world nothing is certain but death and taxes….”
By Teri K. Callen, Esq.
Ben Franklin said it all when he said that! But how certain are we in South Carolina about tax sales??
Section 12-51-160 says that an action to invalidate a tax sale must occur within two years of sale under the statute of limitations. It goes further to say that a tax deed is evidence of good title and that all proceedings of the tax sale have been complied with.
So once the two year statute of limitations has passed, the purchaser from the tax sale has good title, right?
Wrong. Despite the Legislature’s attempt to give clear title to tax sales, they are anything but good title. In fact, when I was practicing in Beaufort County, we routinely overturned tax deeds because we were able to show that there was a failure of the statutory notice requirement- ergo, no due process.
South Carolina Courts have consistently held that where the taxpayer was not on actual notice of the proceeding to sell his property in satisfaction of a tax obligation, such a transaction must be void as a matter of public policy. Corbin v. Carlin, 366 S.C. 187, 620 S.E.2d 745 (Ct. App. 2005). The Court reasoned that the Legislature intended that the two year statute of limitation was imposed “to create a time limit during which one who lost title to property through a tax sale, after proper notice, may attempt to regain title.” Id. (emphasis added)
It is often easy to show that the proper notice was not given, such as when the Mortgagee was never given notice of the tax sale as required by §12-51-140. In Smith v. Barr, it took the testimony of the plaintiff/defaulting taxpayers and the manager of the subdivision stating that they never saw the notice posted to persuade the fact-finder and prove their case by a preponderance of the evidence. 375 S.C. 157, 650 S.E.2d 486 (Ct. App. 2007).
However, there is light at the end of the tunnel…at least after ten years. Section 15-67-220 provides for adverse possession “under color of title” or constructive adverse possession. 8 S.C. Jur. Adverse Possession § 5 (2005). Accordingly, after ten years, Investors Title is willing to insure title to a tax deed.
That gives insurable title but not marketable title. If your client seeks marketable title, he or she may bring an action in the court of Common Pleas for the purpose of barring any other claim to the real property, i.e. a suit to quiet title. S.C. Code Ann. § 12-61-10. Many savvy investors even build the cost of a quiet title action into the acquisition costs of the property.
The moral to this story is that if you see a tax deed in the chain within the previous ten years, call the SC Office to determine insurability…and even if it has been more than ten years, make sure to advise your client that insurable and marketable title are not one in the same!
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