Sale of Tax Delinquent Lands

real estate lawSale of Tax Delinquent Lands

Read these Arkansas Real Estate Laws, and see how they apply to you:

§ 26-37-202 – Procedure to sell.

(a) (1) Bidders may bid at the sale or mail their bid to the office of the Commissioner of State Lands.

(2) Bids shall be delivered at the appropriate place before the deadline established in the notice of the sale.

(b) (1) If at the scheduled public sale a person or entity does not bid at least the amount of delinquent taxes, penalties, interest, and the costs of the sale, the Commissioner of State Lands may negotiate a private sale.

(2) (A) Except as provided in subdivision (b)(2)(B) of this section, a negotiated private sale shall be approved by the Attorney General before conveyance of the land by the Commissioner of State Lands.

(B) A negotiated private sale that occurs later than two (2) years after the scheduled public sales does not require approval by the Attorney General.

(c) (1) Except as provided in subdivision (c)(2) of this section, the Commissioner of State Lands shall conduct tax-delinquent sales in the county where the land is located.

(2) If the Commissioner of State Lands determines that sufficient parcels of land located in one (1) county do not exist to justify a single sale in one (1) county, the Commissioner of State Lands may hold a tax-delinquent land sale in one (1) location and sell land located in more than one (1) county if the counties are adjoining counties.

(d) The sales shall be conducted on the dates specified in the notices required by this subchapter.

(e) (1) After a sale of the land by the Commissioner of State Lands, including a negotiated sale, the Commissioner of State Lands shall notify the owner and all interested parties of the right to redeem the land within ten (10) days, excluding Saturdays, Sundays, and legal holidays, after the date of the sale by paying all taxes, penalties, interest, and costs due, including the cost of the notice.

(2) The notice under subdivision (e)(1) of this section shall be sent by regular mail to the last known address of the owner and all interested parties.

(3) If the land is not redeemed, a limited warranty deed shall be issued by the Commissioner of State Lands to the purchaser.

(f) As used in this section, “interested party” has the same meaning as in § 26-37-301.

§ 26-37-203 – Conveyance to purchaser — Contest.

(a) If the tax-delinquent land is sold, the Commissioner of State Lands shall convey the tax-delinquent land by issuing a limited warranty deed to the land.

(b) (1) Except as provided in subdivision (b)(2) of this section, an action to contest the validity of a conveyance under this section or a negotiated sale under § 26-37-101 is barred if not commenced within ninety (90) days after the date of the conveyance.

(2) A cause of action by a person suffering a mental incapacity, a minor, or a person serving in the United States armed forces during time of war during the one-year period under subdivision (b)(1) of this section is barred if not commenced within two (2) years after the disability is removed, the minor reaches majority, or the person is released from active duty with the United States armed forces during time of war.

(c) A deed issued after January 1, 1987, by the Commissioner of State Lands is not void or voidable on the ground that the county did not strictly comply with the laws governing tax-delinquent land.

(d) This section does not prevent a taxpayer from contesting the validity of a deed issued by the Commissioner of State Lands on the ground that taxes have actually been paid.

§ 26-37-204 – Sales set aside.

(a) In the event the sale is set aside by legal action or if the land is proven to be nonexistent or double assessed, the purchaser shall be entitled to reimbursement of moneys paid.

(b) The Commissioner of State Lands shall have the authority to set aside any sale. In the event the Commissioner of State Lands determines that a sale shall be set aside, the purchaser may be entitled to reimbursement of moneys paid to the Commissioner of State Lands.

(c) In cases where sales may be set aside by the Commissioner of State Lands or by legal action by the record owner or the heirs or assigns of the record owner, the record owner or the heirs or assigns of the record owner shall pay all back taxes, penalties, interest, and costs charged against the land.

(d) If the Commissioner of State Lands determines that the owner and all interested parties did not receive the required notice of sale and right to redeem, the Commissioner of State Lands shall:

(1) Set aside the sale; or

(2) Notify the owner and interested parties of the reasons why the Commissioner of State Lands does not believe the sale should be set aside.

(e) As used in this section, “interested party” means the same as in § 26-37-301.

(f) The Commissioner of State Lands shall not be liable for any monetary damages to any owner, interested party, or purchaser of tax-delinquent land for any action taken or any omission of action related to the sale of tax-delinquent land.

(g) An owner or interested party shall tender cash or certified funds, including without limitation a money order, cashier’s check, or certified bank check equal to the amount of all taxes, penalties, interest, and costs charged against the tax-delinquent land:

(1) Into the registry of the court before filing a complaint to set aside a sale of the tax-delinquent land; or

(2) With the Commissioner of State Lands before asking the Commissioner of State Lands to set aside a sale of the tax-delinquent land.

§ 26-37-205 – Distribution of funds.

(a) All moneys collected by the Commissioner of State Lands from the sale or redemption of tax-delinquent lands shall be distributed as follows:

(1) (A) First, to the Commissioner of State Lands, the penalties, the collection fees, the sale costs, and the other costs as prescribed by law.

(B) The sale costs, including without limitation fees for title work;

(2) Second, to each county an amount equal to the taxes due plus interest and costs to the county as certified by the county collector, which amount shall be held in an escrow fund administered by and remitted to the county within one (1) calendar year of the receipt of the moneys by the Commissioner of State Lands;

(3) (A) Third, to each county an amount equal to the delinquent personal property taxes, plus penalty, of the owner or owners of the tax-delinquent land as certified by the county collector, which amount shall be held in an escrow fund administered by and remitted to the county after one (1) calendar year of the receipt of the moneys by the Commissioner of State Lands.

(B) The Commissioner of State Lands shall review the information provided by the county collector and any other interested party to ascertain:

(i) Whether the personal property tax and penalty qualifies to be withheld from the tax-delinquent land sale proceeds; and

(ii) The amount of personal property tax and penalty that qualifies under this subdivision (a)(3) to be withheld.

(C) If the Commissioner of State Lands is required to make a refund of the personal property taxes withheld under subdivision (a)(3)(A) of this section to a purchaser of tax-delinquent lands for any reason, the amount of the refund shall be recovered by the Commissioner of State Lands from the county or counties that originally received the proceeds under this subdivision (a)(3) of the tax-delinquent land sale.

(D) The Commissioner of State Lands shall promulgate rules and forms needed to administer this subdivision (a)(3).

(E) This section does not require the Commissioner of State Lands to search county records to determine whether an owner of tax-delinquent land owes delinquent personal property taxes.

(F) This section does not grant a county a right to a lien against real property for the payment of delinquent personal property tax;

(4) (A) Fourth, to the Department of Finance and Administration an amount equal to the delinquent tax, penalty, and interest owed to the department and for which certificates of indebtedness have been filed against the owner or owners of the tax-delinquent land as certified by the department, which amount shall be held in an escrow fund administered by and remitted to the department within one (1) calendar year after the receipt of the moneys by the Commissioner of State Lands.

(B) If the Commissioner of State Lands is required to make a refund of the taxes withheld under subdivision (a)(4)(A) of this section to a purchaser of tax-delinquent lands for any reason, the amount of the refund shall be recovered by the Commissioner of State Lands from the department from the proceeds originally received under this subdivision (a)(4).

(C) The Commissioner of State Lands shall promulgate rules and forms needed to administer this subdivision (a)(4);

(5) (A) Fifth, to each county an amount equal to the delinquent solid waste assessments, plus penalty and interest, of the owner or owners of the tax-delinquent land as certified by the county collector, which amount shall be held in an escrow fund administered by and remitted to the county after one (1) calendar year of the receipt of the moneys by the Commissioner of State Lands.

(B) The Commissioner of State Lands shall review the information provided by the county collector and any other interested party to ascertain:

(i) Whether the amount of delinquent solid waste assessment and penalty and interest qualifies to be withheld from the tax-delinquent land sale proceeds; and

(ii) The amount of delinquent solid waste assessment and penalty and interest that qualifies under this subdivision (a)(5) to be withheld.

(C) If the Commissioner of State Lands is required to make a refund of the delinquent solid waste assessment withheld under subdivision (a)(5)(A) to a purchaser of tax-delinquent lands for any reason, the amount of the refund shall be recovered by the Commissioner of State Lands from the county or counties that originally received the proceeds under this subdivision (a)(5) of this section of the tax-delinquent land sale.

(D) The Commissioner of State Lands shall promulgate rules and forms needed to administer this subdivision (a)(5).

(E) This section does not require the Commissioner of State Lands to search county records to determine whether an owner of tax-delinquent land owes delinquent solid waste assessments.

(F) This section does not grant a county a right to a lien against real property for the payment of delinquent solid waste assessment; and

(6) Sixth, to be placed in another escrow fund administered by the Commissioner of State Lands, the remainder, if any.

(b) If no actions are brought within the time limits prescribed under this subchapter, the remaining funds, if any, shall be distributed by the Commissioner of State Lands as follows:

(1) Ten percent (10%) of the remaining funds up to a maximum amount of five hundred dollars ($500) shall be paid to the Commissioner of State Lands for the administration of the distribution of the funds;

(2) (A) After payment is made to the Commissioner of State Lands pursuant to subdivision (b)(1) of this section, the amount left in the remaining funds shall be paid to the former owners of the tax-delinquent land.

(B) (i) “Former owner” means a person, partnership, corporation, or other legal entity capable of owning real property in the State of Arkansas and that holds record title to the real property on the date of sale by the Commissioner of State Lands.

(ii) “Former owner” does not include heirs or relations beyond the first degree of consanguinity.

(C) (i) A former owner must file an application with the Commissioner of State Lands requesting the release of the funds.

(ii) The application shall be provided by the Commissioner of State Lands and shall require proof of ownership of the tax-delinquent land as well as proof of authority to act on behalf of the owner.

(iii) The application may require other information the Commissioner of State Lands deems necessary before the release of the funds.

(D) (i) The former owner shall release and relinquish all rights, title, and interests in and to the tax-delinquent land.

(ii) The Commissioner of State Lands shall provide a release deed to the former owner to execute.

(E) In the event of any dispute, claim, or multiple claims of ownership or controversy regarding the release of the funds, the Commissioner of State Lands may require the party or parties to provide a court order to resolve the issues and to establish the party or parties entitled to the remaining funds.

(F) An agreement by a former owner, the primary purpose of which is to locate, deliver, recover, or assist in the recovery of remaining funds, is enforceable only if the agreement:

(i) Is in writing;

(ii) Clearly sets forth the nature of the property and the services to be rendered;

(iii) Provides a fee of not more than ten percent (10%) of the recovery;

(iv) Is signed by the former owner; and

(v) States the value of the remaining funds before and after the fee or other compensation has been deducted.

(G) (i) An agreement covered by subdivision (b)(2)(F) of this section that provides for compensation that is unconscionable is unenforceable except by the former owner.

(ii) A former owner who has agreed to pay compensation that is unconscionable may maintain an action to reduce the compensation to a conscionable amount.

(iii) The court may award reasonable attorney’s fees to a former owner that prevails in the action.

(H) Subdivision (b)(2)(G) of this section does not preclude a former owner from asserting that an agreement covered by subdivision (b)(2)(F) of this section is invalid on grounds other than unconscionable compensation.

(I) (i) The Commissioner of State Lands shall make all funds payable to the former owner.

(ii) No funds shall be made payable to any other person or entity other than the former owner without a court order directing the payment to the other person or entity.

(iii) No interest shall be paid to the former owner on the funds.

(J) (i) Anyone filing a claim or assisting with the filing of a claim that results in the erroneous payment of a claim is responsible for the repayment of all funds paid.

(ii) Any claim filed fraudulently is punishable as a Class D felony; and

(3) (A) Any funds placed in escrow prior to July 1, 2005, shall be held in escrow for five (5) years and at the end of the five-year period, if the funds have not been distributed, the escrow funds shall escheat to the county in which the property is located.

(B) Any funds placed in escrow on and after July 1, 2005, shall be held for three (3) years, and at the end of the three-year period, if the funds have not been distributed, the escrow funds shall escheat to the county in which the property is located.

(c) All funds distributed to each county by the Commissioner of State Lands from the redemption or sale of tax-delinquent lands, including any interest and costs, are to be distributed to the applicable taxing units where the delinquent land is located within the county in the manner and proportion that the taxes would have been distributed if they had been collected in the year due.

(d) All funds received by a county from the redemption of tax-delinquent land at the county level, including any penalty, interest, and costs, are to be distributed to the applicable taxing units where the delinquent land is located within the county in the manner and proportion that the taxes would have been distributed if they had been collected in the year due.

(e) This section shall be severable, and if any phrase, clause, sentence, or provision of this section is declared to be contrary to the laws of this state, the validity of the remainder of this section shall not be affected.

§ 26-37-206 – Void sales.

If the taxes charged on any land or lot, or part thereof, are regularly paid, and the land or lot erroneously returned delinquent and sold for taxes, the sale of the land or lot shall be void and the money paid by the purchaser at such a void sale shall be returned to him or her by the officer having the money in charge, on the order of the county court that the land was erroneously returned delinquent and sold for taxes.

§ 26-37-207 – Invalid donation by state.

If the title of any person holding lands by virtue of a donation deed from the state shall, for any cause, be determined to be invalid in any action brought by or against him or her at law or in equity, then such donor, his or her heirs, successors, and assigns, shall be entitled, in addition to all other available remedies, to a lien upon the lands for the amount of the taxes, penalty, and costs for which the lands were originally forfeited and sold, plus all taxes on the lands which have subsequently been paid by the purchaser, his or her heirs, successors, and assigns, together with all taxes and improvement district assessments which may have been paid on the lands following the donation, with interest on the amount paid for the lands and on the taxes and assessments from the respective dates of payment until repaid at the rate of six percent (6%) per annum. The court rendering judgment or decree against the validity of the donation shall declare and enforce the lien.

§ 26-37-208 – Wrong name in tax book.

No sale of any land or lot for delinquent taxes shall be considered invalid on account of its having been charged on the tax book in any other name than that of the rightful owner if the land or lot is, in other respects, sufficiently described on the tax books and the taxes for which the land or lot is sold are due and unpaid at the time of the sale.

§ 26-37-209 – Compensation for improvements.

(a) (1) A purchaser under this chapter of any land or town lot or city lot or another person claiming under the purchaser shall not be entitled to any compensation for any improvement that the purchaser shall make on the land or town lot or city lot within the time frame established in § 26-37-203, except for:

(A) The cost of repairs necessary to prevent deterioration of any improvements on the land or town lot or city lot; or

(B) The cost necessary to comply with any state, county, or city code requirements.

(2) The compensation allowed under subdivision (a)(1) of this section shall be a charge upon the land.

(b) For an improvement made after the expiration of the time frame established in § 26-37-203, the purchaser under this chapter shall be allowed the full cash value of the improvement, and the allowance shall be a charge upon the land.

§ 26-37-210 – Sale of timber, oil, gas, or mineral rights.

(a) If a timber right, an oil right, a gas right, or a mineral right is owned or assessed separate from the fee in the land and the taxes due on the right are not paid, the timber right, oil right, gas right, or mineral right is subject to the tax laws governing forfeiture and sale of tax-delinquent land.

(b) Any timber right, oil right, gas right, or mineral right forfeited and certified to the Commissioner of State Lands is subject to disposition as provided in this chapter.

§ 26-37-211 – Purchaser of timber rights.

The sale of timber rights for delinquent taxes shall vest the purchaser with whatever right to enter, cut, and remove the timber that was possessed by the former owner.

§ 26-37-212 – Dedication of land as public park.

If an owner of land dedicates it to the city where the land is located for park purposes by a filed and recorded plat and bill of assurance and there are any delinquent general taxes of the state or a political subdivision of the state against the land, upon a showing that title to the land is dedicated to the city as a public park, the Commissioner of State Lands and the proper county officials of the county where the land lies shall cancel any delinquent general taxes.

§ 26-37-213 – Record of lands forfeited.

(a) The Commissioner of State Lands shall keep a permanent record of all lands forfeited to the state for taxes and note in the record in whose name the forfeited land was listed, for what year or years it was taxed, the amount of tax due thereon, and when forfeited.

(b) The record shall be open to the inspection of anyone.

§ 26-37-214 – Limitation on liability.

Except as provided in § 26-37-204(a) and (b), the Commissioner of State Lands as well as the county from which the property is certified shall be immune from liability for damages, costs, fees, or compensation for improvements made to the property arising from the sale of tax-delinquent property even if the sale is found to be invalid or void as a result of error by the Commissioner of State Lands or the county.

Remember:  The law often changes, and this website does not offer a complete compilation of Arkansas law. Each case and situation is different. This webpage is meant to give you general information and not to give you specific legal advice. 

If you need help:

If you need assistance with your Real Estate matter in Arkansas, please contact Deborah at The Hardin Law Firm, PLC.  For our out-of-state clients, we are available via phone, fax, and email, to assist you with your real estate needs.

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Published on: July 01, 2015

 Last updated: October 24, 2016 at 17:02 pm

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