Bonorable Evans J. Adklns

CountyAttorney McCulloch County Brady, Texas

Dear Sir: OpinionNO. 0-5668 Re: Taxation of land acquiredby the State at tax sales held in accordance with the provisions of Article 7345bV.A.C.S.

In your letter of October 8, 1943, you state ths,tcertain land in your county has been acquired by the State of Texas at tax sales held in accordancewith the provisions of Article 7345bV.A.C.S., and that this land customarily is sold by your sheriffat public auction after the expiration of the statutoryredemption period. With reference to this situation you inquire:

1. After the land has been purchasedby the State, how should it be shown on the tax rolls?

2. When the purchaserat the sheriff's sale takes title, is such title free of all back taxes, providing that the proceedingshavebeen regular?

3. Would the answers to the above questions be altered or affected by the fact that the land
was bid inby the State for its "adjudgedvalue" rather than for "theamount of the judgmentsnd costs"?

In our OpinionNo. 0-5506we ruled that the purchaser at a foreclosure sale conducted in accordancewith the provisions of Article 7345b acquires a titlewhich is free of all liens and claims for ad valorem taxes delinquent at the time of the ,iudnmentin the tax suit, unless such claims or liens
are in favor of a taxing unitwhich was neithermade a party to the suitnor servedwith notice of such suit. In the Fnstant situation the State is the purchaser at the foreclosure sale, and a subsequentpurchaser takes title from the State rather than from such sale. Consequently,the aforementioned Opinion affords a partial solution to the questions here under consideration. The State as purchaser at the foreclosure saleHon. Evans J. Adkins, page 2 o-5668

acquires a titlewhich is free and clearwith respect to the taxesdiscussed in said Opinion; this title is in turn acquired by the personwho purchases from the State,with the result that,with respect to the taxing unitswhich were parties to the tax suit or which were notified of its pendency, suchperson acquires at the very least a titlewhich is free from liens and claims for ad valorem taxesdelinquent at the date of judgment in the tax suit.

Another partial solution is afforded, by our Opinion No. O-3624,wherein we held that after the expiration of the period of redemption, land acquired by the State in tax foreclosure proceedingsand held by it cannotbe assessed for taxes. As a consequence of this Opinionwe must conclude that a person who purchases such land from the State acquires, in addition to the title discussed in the precedingparagraph, a titlewhich is free from all liens and claims for ad valorem taxeswhich arise subsequent to the expiration of the period of redemption.

Consequently, if your secondquestion is to be answered other than in the affirmative, such answer can be made only if it is possible for the land to become burdenedwith liens and claims for taxesduring the two year period in which the original ownerpossesses a power of redemption.

In our OpinionNo. o-265 and,in subsequentOpinions, the tax immunityaccorded lands held by the State after the expiration of the period of redemptionwas rested upon the principle that, absent a clear expressionof intent, the State neither taxes its own property nor consents to its taxationby other taxing units. Property held by the State after the explratlon of the period of redemption clearly fallswlthin this principle; the status of suchproperty prior to the expiration of the period isnot so easily discernible,but if such property can be said to be "propertyownedby the State" or "property the title to which is in the State", it is apparent that the aforementionedprinciplewill operate to precludeany liens
or claims for taxes during suchperiod.

When the State bids in land at a tax foreclosure sale, the sheriff is required to "makeand executea deed to the State" and to record suchdeed in the record,of deeds. Articles 7328, 7330, 7345b (7). Such deed standsas the strongestmuniment of title to the propertywhich it covers; "any suchdeed shallbe held in any court of law or equity in this State to vest good and perfect title in the purchaser thereof, subject to be impeachedonly for actual fraud." Section 13 of Article VIII of the Texas Constitution;Article 7330. "Thetitle to said property" is "heldby the taxing unit purchasing same for the use and beneflt of Itselfand all other taxing unitswhich._ .

Hon. Evans J. Adklns, page 3 O-5668

are parties to the suit and which have been adjudged in said suit to have tax liens against suchproperty." Article 7345b (9). As purchaser of suchproperty, the State "acquiresall of the title of both the plaintiffand defendant In the judgment" in the tax suit. 730 (errordenied.). City ofHouston v. Bartlett, 68 S.W. Contrariwise,for two years after the foreclosure sale the original owner possesses the power to redeem the propert 7 and the right 'to possession thereof. Articles 7345b (12 7340; 40 Tex, Jur. 1 1 205, 206. The difficult task--the'taskwhich will evolve a solution to the questions underdiscussion--is to ascertainwhich of these bundles of powers, rlshts and privileges constitutes the holder thereof the "owner of the property for purposes of taxation.

In 26 R.C.L. 1 290, the next-writer states:

If 0

. .Lands bought inby a state at a sale for non-payment of taxes and heldby the state subject to the former owner'sright of redemption cannot be assessed for taxes while so held."
Agaln in 26 R.C.L. 1 384, thewriter sags: ,I

. . 0While the details of the process of redemption vary In the different states, the procedure being of course entirelya statutory one, the methods adopted fall into two general classes. By the originalmethod, which stillprevails Inmany of the states,a deed was delivered to the purchaser within a few days after the sale, and the title passed to him subject to defeasanceby redemption during the statutoryperiod,which was commonly two years from the sale. During that period the purchaser remained passive, and if the owner failed. to exercise his right of redemptionwithin the specified ,time, the titlebecame absoluteby force of the statute, without any furtherproceedings in court OP elsewhere to establish it. By the secondmethod, which is now in force in a number of the states, the purchaser's title is inchoate and he receives no deed until the period of redemption has expired,and before the expirationof the period, he must give personal notice to the owner, if it is possible to find him, of the timewhen the right of redemptionwill expire and the amountwhich he must pay in order to redeem the property, and no deed Is issued to the purchaser and no title passes to him until this notice has been sent or it has been shown to be impossible to sent it........."Hon. Evans J, Aakins, page 4 o-5668

Itwill be notlced that the method of redemption establishedby the Texas Constitutionand.the statutes enacted thereunder falls~w1thin the first class above described. We aPe inclined to agree with thewriter's statement that in jurisdictionsfollowing this mode of redemption, tftle to then property passes to the purchaserwith the tax deed, such title being subject to defeasanceduring the redemption period. Tne power of redemption and the right to possessionpossessed the original owner are not, we feel, sufficient indLc%a of by
ownership to justifythe taxation of such person. During the period of redemption, title is out of the orlginal owner; to regain such title hemust exercise the power which he possesses.

Additioml evidence in support of this conclusion IS found in the statuteswhich prescribe the mode-'of redemption of property soid at tax sales~.Articles 7283 and 7345b allow redemption of propertyupon paymentby the original owner, lnter alla, of 'alltaxes. D a .thereafterpaid thereon." The textwriter in 40 Tex. Jur. 1 201 has interpreted this provlsLon to refer to taxes "paidby the purchaser subsequent to his purchase." We agree with thfs lnterpretatlon. If It had been the intention of the legislature to tax such property against the 'originalowner thereofduring the period of redemption, certainly some verb other than "paid"would have been employed, for the use of thisverb normally conveys the Idea that the original owner 1s to reimburse some other person for taxes which suchperson has paid, rather than the idea that the original owner himself is to pay such taxes as a condition of redemption.

Consequently,we hold that the purchase by the State vests in it a defeasible title,which title 1s evidencedby the sheriff'sdeed, and that as holder of this title the State is the "owner"of such property for purpose of"taxation, If this be true, the property is not subject to taxationduring the two year period, Your second questfon is thereforeanswered .in the affirmative.

In reachi% this conclusionwe are not unaware of the fact that our courts have occasFonallyasserted that the original
owner of property sola at a tax foreclosure sale possesses "title" to such property aurlng the period of redemption. See e-g., Bente v. Sullivan, 115 S.W. 350, 353 (errorrefused) and McGraw v. Potts, 27 S.W. (2a) 550. However, an examination of these and similar cases reveals that In each the court was employing the word "title"not in the strictly technical sense in which "title" is tantamount to ownershipbut rather fn the looser sense in which "title* Is but an abbrevfatedmethod of saying that the original owner possesses a power of FedGmption and a right to possession. Innone of these cases has a court-- 1

Han, Evans J. Adkins, page 5 o-5668

eitherdeclared or intimated that the possession of such power and right constitutes the possessor an "owner" for purposes of taxation. Consequently,we deem none of these
cases to be determinative of the question at hand. ,Anycontrary statements contained in our OpinionNo. O-3624 are hereby overruled.

In answer to your first question,you are respectfully advised that such property shouldbe carried on the tax rolls
as Fs other non-taxableproperty owned by the State. Your third question is answered in the negative;we se8 nothing either in the statutes or in the cases which would make the
answers to your preceding questionsdependent upon the method by which the property Is bid in by the State.

Trusting that the foregoing satisfactorilyanswers your questions,we are

Yours very truly

ATTORNEYGENERAL OF TEXAS

By s/R.Dean Moorhead R. Dean Moorhead

Asslstant

RDM:fczwc

APPROVEDDEC 10, 1943 s/GroverSellers FIRST ASSISTANT ATTORNEYGENERAL

This Opinion Consideredand Approved In Lfmited Conference