Our real estate litigation practice touches some of the saddest moments of client life, such as where a family home is lost to tax sale. When real estate taxes and other municipal charges are unpaid, the municipality will auction the property to the highest bidder. The winning bidder must pay the tax due to the municipality. The winning bidder is then given the privilege to later file a new lawsuit to permanently take the real property from the defaulted taxpayer/owner.
The lawsuit to take ownership of the property asks a judge to extinguish the title owner's "right of redemption." This is a right to refund to the successful auction bidder the taxes paid to the municipality, plus various fees, interest and expense allowed by statute. The defaulted taxpayer/owner can make this payment, or "redemption," right up to the moment a judge's gavel falls in the lawsuit.
If that redemption is made, all is well and the taxpayer/owner is fully restored to her property.
Where the redemption is not made, usually because of the very hardships that prevented payment of the original tax bill, the court will issue a final order "extinguishing rights of redemption," and granting fee simple title to the successful bidder. This is where today's story begins.
Much of the tax sale and foreclosure process runs on the good faith and professionalism of the lawyers prosecuting the cases--- Our judges rely on truthful representations about service, the status of non-payment, and the material facts of each case. Our rules of professional conduct call this a "duty of candor." It often requires a lawyer to disclose facts, circumstances and controlling law that might impair or even defeat the relief she seeks from the court.
The duty of candor greases the gears that run our courts. If counsel is not deemed truthful, she will not obtain desired results. Worse, if counsel is not candid and wrongly obtains a result, then the integrity of our court system is damaged. Further to that point, in a society built on a foundation of property rights, any perversion of the court system by which ownership is involuntarily stripped from one person and awarded to another damages our Nation.
Where a lawyer and her client seeks to foreclose rights of redemption, the order issued by the court contains several requirements, all of which must be met before the lawyer's client may evict the current occupants of the foreclosed property:
It is at this point of the proceedings that an attorney's duty of candor is most required for the just operation of our court. The statutes do not expressly say that payment must be made to the municipality before a writ of possession is requested. However, it is logical and just to anyone with a real property background that payment must be made before title can be received, and that title must be received before one has rights to actually possess property, and that one must have legal possession before relying on judicial process to evict the former owner and occupants.
This is not always the case, though, in our local court systems. Some high-volume tax sale foreclosure businessmen and their entities seek writs of possession (item #3 on the list, above) before making full payment in exchange for a deed showing their ownership. This creates the injustice of dispossessing the prior owner while depriving them of the money representing equity in the property. In short, they have lost the property, and they are simultaneously deprived of the money paid for the property.
A recent case handled by this Firm illustrates the issue, and how the court handles such lack of candor when it is revealed.
Our client, an elderly individual with dementia, lost his home to tax sale. His legal guardian could not redeem the property, and so the court issued the order extinguishing rights of redemption and directing the four items, listed above, for the transfer of ownership to the successful auction bidder.
The successful bidder, through its lawyer, made immediate request for a writ of possession, before making full payment and before receiving a title deed. The request filed with the court and upon which the judge relied did not candidly disclose that payment had not yet been made. The court issued the writ, and the Sheriff arrived to put the elderly individual out of the house, with the assistance of his care-giver and guardian.
It was only after this Firm filed a request to set aside the order for the lawyers lack of candor that the successful bidder made payment. But this payment was two months after the elderly individual was put out, and after the successful bidder spent over 50,000 renovating the property in preparation for a flip.
The judge hearing the motion found that the successful bidder had, indeed, jumped the gun to request a writ of possession before having paid for the property. This fell under a rule applicable to all lawyers and litigants, in all cases, barring claims made "without substantial justification." In this instance, like many others that go unnoticed, the successful bidder sought to use the equity in the property as a no-interest loan from the former owner to prepare the property for sale. Without court intervention, the property would have been flipped and those proceeds of sale used to fund payment to the municipality of the bid price. The municipality would have been asked to issue the deed directly to the new third-party owner, or two deeds would have been executed simultaneously.
And throughout that process, our elderly client would have been deprived of both a home and his money. The judge was as appalled as you likely are while reading this story. It was for the lack of candor that damages were awarded to our elderly client that included emergency hotel costs and our attorney's fees.
The duty of candor applies to all cases, in all courts. A lack of candor by your opponent, if proven, may well permit you to vacate a prior judgment or to obtain money damages, even where all appears lost.
The lawsuit to take ownership of the property asks a judge to extinguish the title owner's "right of redemption." This is a right to refund to the successful auction bidder the taxes paid to the municipality, plus various fees, interest and expense allowed by statute. The defaulted taxpayer/owner can make this payment, or "redemption," right up to the moment a judge's gavel falls in the lawsuit.
If that redemption is made, all is well and the taxpayer/owner is fully restored to her property.
Where the redemption is not made, usually because of the very hardships that prevented payment of the original tax bill, the court will issue a final order "extinguishing rights of redemption," and granting fee simple title to the successful bidder. This is where today's story begins.
Much of the tax sale and foreclosure process runs on the good faith and professionalism of the lawyers prosecuting the cases--- Our judges rely on truthful representations about service, the status of non-payment, and the material facts of each case. Our rules of professional conduct call this a "duty of candor." It often requires a lawyer to disclose facts, circumstances and controlling law that might impair or even defeat the relief she seeks from the court.
The duty of candor greases the gears that run our courts. If counsel is not deemed truthful, she will not obtain desired results. Worse, if counsel is not candid and wrongly obtains a result, then the integrity of our court system is damaged. Further to that point, in a society built on a foundation of property rights, any perversion of the court system by which ownership is involuntarily stripped from one person and awarded to another damages our Nation.
Where a lawyer and her client seeks to foreclose rights of redemption, the order issued by the court contains several requirements, all of which must be met before the lawyer's client may evict the current occupants of the foreclosed property:
- Pay the full bid purchase price to the municipality (this is the amount bid above the amount of the delinquent tax);
- Receive a deed from the municipality naming the new title owner;
- Request and receive writ of possession (a court instruction to the Sheriff directing that the new owner be put in actual possession of the real property;
- Execution of the writ by the Sheriff (after notice of a date certain, the occupants and their possessions are put out).
It is at this point of the proceedings that an attorney's duty of candor is most required for the just operation of our court. The statutes do not expressly say that payment must be made to the municipality before a writ of possession is requested. However, it is logical and just to anyone with a real property background that payment must be made before title can be received, and that title must be received before one has rights to actually possess property, and that one must have legal possession before relying on judicial process to evict the former owner and occupants.
This is not always the case, though, in our local court systems. Some high-volume tax sale foreclosure businessmen and their entities seek writs of possession (item #3 on the list, above) before making full payment in exchange for a deed showing their ownership. This creates the injustice of dispossessing the prior owner while depriving them of the money representing equity in the property. In short, they have lost the property, and they are simultaneously deprived of the money paid for the property.
A recent case handled by this Firm illustrates the issue, and how the court handles such lack of candor when it is revealed.
Our client, an elderly individual with dementia, lost his home to tax sale. His legal guardian could not redeem the property, and so the court issued the order extinguishing rights of redemption and directing the four items, listed above, for the transfer of ownership to the successful auction bidder.
The successful bidder, through its lawyer, made immediate request for a writ of possession, before making full payment and before receiving a title deed. The request filed with the court and upon which the judge relied did not candidly disclose that payment had not yet been made. The court issued the writ, and the Sheriff arrived to put the elderly individual out of the house, with the assistance of his care-giver and guardian.
It was only after this Firm filed a request to set aside the order for the lawyers lack of candor that the successful bidder made payment. But this payment was two months after the elderly individual was put out, and after the successful bidder spent over 50,000 renovating the property in preparation for a flip.
The judge hearing the motion found that the successful bidder had, indeed, jumped the gun to request a writ of possession before having paid for the property. This fell under a rule applicable to all lawyers and litigants, in all cases, barring claims made "without substantial justification." In this instance, like many others that go unnoticed, the successful bidder sought to use the equity in the property as a no-interest loan from the former owner to prepare the property for sale. Without court intervention, the property would have been flipped and those proceeds of sale used to fund payment to the municipality of the bid price. The municipality would have been asked to issue the deed directly to the new third-party owner, or two deeds would have been executed simultaneously.
And throughout that process, our elderly client would have been deprived of both a home and his money. The judge was as appalled as you likely are while reading this story. It was for the lack of candor that damages were awarded to our elderly client that included emergency hotel costs and our attorney's fees.
The duty of candor applies to all cases, in all courts. A lack of candor by your opponent, if proven, may well permit you to vacate a prior judgment or to obtain money damages, even where all appears lost.
