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Tax Sale for Demolition Lien

Flat Creek Falls, LLC v. Labat, A23A1145, 2023 WL 5496667 (Ga. Ct. App. Aug. 25, 2023)

In these consolidated appeals filed by the owners of separate properties sold at a tax sale, Flat Creek Falls, LLC and Green Turnkey Corporation (“the property owners”), we must determine whether excess funds after the tax sale may be used to pay demolition liens filed by the City of Atlanta (“the City”) on the real property before the tax sale. Relying primarily upon the Supreme Court of Georgia’s opinion in DLT List, LLC v. M7VEN Supportive Housing and Dev. Group, 301 Ga. 131, 800 S.E.2d 362 (2017), the property owners contend that the trial court erred in “awarding excess tax sale funds, which are personal property, to pay for the City’s demolition lien that attached only to real property.” We agree.

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In these cases, the property owners assert that the reasoning in DLT List also applies to the statute creating the City’s demolition lien, OCGA § 41-2-9 (a) (7), because it provides:

That the amount of the cost of demolition, including all court costs, appraisal fees, administrative costs incurred by the … municipal tax collector or city revenue officer, and all other costs necessarily associated with the abatement action, including restoration to grade of the real property after demolition, shall be a lien against the real property upon which cost was incurred.

(Emphasis supplied.) While the particular issue decided by the Supreme Court of Georgia in DLT List differs from that presented here, its reasoning logically extends to the City’s right to the excess funds in this case. Simply put, we cannot conclude that the City has a right to the excess tax funds, which are personal property, when the General Assembly has provided that the City’s lien applies only to the real property.5 See DLT List, 301 Ga. at 135, 800 S.E.2d 362. See also Jackson v. Wellington & Assoc., 389 F.Supp.3d 1199, 1210-1211 (III) (B) (ii) (N.D. Ga. 2019) (relying on DLT List to find that a security deed to real property does not entitle the holder to excess funds from a tax sale). We therefore reverse the trial courts’ conclusion to the contrary in both cases before us.6

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OCGA § 48-4-5 does not create any substantive legal rights or somehow convert a lien against real property into one that may be satisfied from personal property. Instead, it requires notice and states the priority of payment for those who have an interest that may be satisfied from the excess funds.