For more than a decade, real estate attorney Stephen Morel has been instrumental in pushing for legislative changes to tax sales rules in Louisiana. He is also the CEO of JurisDeed, a company that has created innovative automated digital solutions for the real estate and tax sales industry. This article first provides an overview of the unique ways that tax sales work in the Bayou State. You can find a full overview of the tax lien process in Morel's white paper.
An Overview of the Louisiana Tax Lien Sale Process
Louisiana is a tax lien state, and auctions are conducted at the parish (county) level and also at the municipal level. Some are live auctions, while others are held online, and the price to purchase a tax lien at auction is fixed – and includes the delinquent taxes, a 5% penalty, and 1% simple monthly interest. But what may be different in Louisiana is that only the lien is sold, not a deed. The factor that bidders compete against each other for is the percentage of ownership of the underlying parcel – which the winning bidder receives as collateral in the event that the lien is not redeemed during the redemption period. Parcels not sold at a tax lien auction are typically sold by the city or parish after five years – unless, of course, the liens have already been redeemed.
Bid Down Ownership Style of Bidding
The percentage of ownership you bid on starts at 100% and is biddable down to 1% - with the winner being the lowest bidder. Upon winning, you have to pay the fixed offering price and in return you are given what is called a tax sale certificate. Sometimes it is referred to as a “tax sale title,” which can be misleading because what you get is a tax sale certificate that conveys no rights of ownership title. Ownership only comes into the picture after the redemption period, if the lien was not redeemed.
The Louisiana Redemption Period
The redemption period is three years from the date the tax sale certificate is recorded. But it can be potentially shortened if the tax lien holder can prove in court that the property was blighted or abandoned at the time of the tax lien auction. In either case, upon redemption the taxing authority pays the tax lien holder the tax sale price paid, a 5% penalty on the tax sale price, and 1% monthly interest on the tax sale price. That 1% interest starts the month of the auction, and runs through the month of redemption. Holders of tax sale certificates should also be vigilant regarding the Louisiana rule that they must deliver a redemption rights notice at least six months before the expiration of the redemption period.
Title Options for a Louisiana Tax Certificate
To take an unredeemed, post-redemption period tax lien and successfully covert it to actual ownership of the property, you have three options. 1) You may file a quiet title civil suit, 2) file for a quasi-judicial “monitions” proceeding, or 3) strictly follow a non-judicial, due diligence compliance process.
Stephen Morel’s White Paper and More
This article is only a brief overview of all the valuable information Morel shared about the nuances of Louisiana tax sale rules and practices. To find out more, check out his highly detailed 2020 white paper about where the state has come from and where it’s headed in terms of tax sales. Be sure to also take advantage of the comprehensive podcast interview with Brian Seidensticker, where he and Morel take a deeper dive into Louisiana tax sales insights.
Learn more about Stephen Morel's company, JurisDeed, both in the Tax Sale Resources interview here and in his many appearances on the Tax Sale Insiders podcast.