3 Years Or 18 Months – How Long Is The Redemptive Period?
Most tax sale purchasers and title attorneys know that tax sale title is subject to redemption within a three (3) year peremptive period from the date of recordation. However, the Louisiana Constitution does contain one exception to this rule. In the City of New Orleans, property that is “abandoned property” or “blighted property” at the time of the tax sale is subject to an attractive redemption period of eighteen (18) months. Article VII, Section 25(B)(2) of the Louisiana Constitution provides “In the [C]ity of New Orleans, when such property sold is residential or commercial property which is abandoned property as defined by R.S. 33:4720.12(1) or blighted property as defined by Act 155 of the 1984 Regular Session, it shall be redeemable for eighteen months after the date of recordation of the tax sale by payment in accordance with Subparagraph (1) of this Paragraph.”
In Smith v. Brumfield, 2013-1171 (La. App. 4th Cir. 1/15/2014); 133 So.3d 70, 78, the Fourth Circuit Court of Appeal recently provided guidance as to what properties satisfy the definition of “abandoned property” or “blighted property” within the meaning of Article VII, Section 25(B)(2). In Smith, the tax sale purchaser sought for the Court to invoke the 18 month peremptive period where the property purchased at tax sale was declared blighted by the City of New Orleans after the tax sale. The Fourth Circuit explained that in order to determine whether the property qualifies for this shortened redemptive period, one must look to those definitions incorporated into Section 25(B)(2) by reference. Louisiana Revised Statute § 33:4720.12(1) defined “abandoned property” as “immovable property that has been adjudicated to a political subdivision for nonpayment of taxes, and which property is vacant or not lawfully occupied.” Act 155 defined “blighted property” as “those premises which have been declared vacant, uninhabitable, and hazardous by the Department of Safety and Permits of the [C]ity of New Orleans.” Applying these definitions to the property at issue, the Court held that property must be declared “abandoned” or “blighted” by the City of New Orleans prior to the tax sale for the shortened redemptive period to apply. Id. The Court declined to retroactively shorten the peremptive period due to the property becoming blighted after the sale and explained that the retroactive shortening of the peremptive period would only serve to “incentivize tax sale purchasers to allow property purchased at tax sale to further fall into disrepair.” Id.
The Smith decision did not address that Louisiana Revised Statute § 33:4720.12(1) which defined “abandoned property” was repealed by Acts 2008, No. 819, § 2, effective Jan. 1, 2009 and not reenacted. By repeal of the statute and its lack of reenactment, one may argue that the Louisiana Legislature intended to change and changed the definition of “abandoned property” for purposes of the eighteen (18) month peremptive period for tax sales in 2009 and thereafter. If “abandoned property” is to be defined by laws on the same subject matter and/or related statutes such as Louisiana Revised Statute § 33:4720.59(D)(2) which defines abandoned property as “property that is vacant or not lawfully occupied,” many more properties in the City of New Orleans would qualify as “abandoned property.” The requirement that the property be adjudicated to the City of New Orleans is not contained in this definition of abandoned property. This argument will likely present itself to the Courts for resolution.
It should be noted that in an effort to revitalize abandoned property and blighted property statewide, the Louisiana Legislature passed Acts 2013, No. 436 which will add Section 25(B)(3) to Article VII of the Louisiana Constitution provided it is approved by a majority of the voters at the statewide election on November 4, 2014. The proposed amendment provides as follows: “In any parish other than Orleans, when such property sold is vacant residential or commercial property which has been declared blighted, as defined by R.S. 33:1374(B)(1) on January 1, 2013, or abandoned, as defined by R.S. 33:4720.59(D)(2) on January 1, 2013, it shall be redeemable for eighteen months after the date of recordation of the tax sale by payment in accordance with Subparagraph (1) of this Paragraph.”
Wesley M. Plaisance is a Partner in the New Orleans office of Breazeale, Sachse & Wilson LLP (www.bswllp.com) where he heads the Tax Sale and Quiet Title Litigation group and practices other commercial litigation with a focus on real estate related litigation. Wesley M. Plaisance regularly handles tax sale litigation matters across Louisiana including without limitation in the City of New Orleans (Orleans Parish), East Baton Rouge Parish, St. Tammany Parish (Including Covington, Mandeville and Slidell), Jefferson Parish, Lafayette Parish, Livingston Parish, Plaquemines Parish and Lafourche Parish. Mr. Plaisance represents tax sale purchasers in suits to confirm tax sale title(s) and ownership with and/or without cancellation of mortgages and other encumbrances and in partition proceedings commenced after a tax sale purchaser confirms only a fractional ownership interest.Mr. Plaisance has also represented and represents tax debtors, landowners, mortgage holders including banks and other interested parties in actions to annul and/or nullify tax sales. Mr. Plaisance additionally handles complex commercial litigation matters arising out of large investment funds created to purchase tax sale certificates and/or tax deeds in Louisiana, Georgia, Indiana and Florida.