If you are delinquent in paying your real property tax in Tennessee, and you lose your real property at a tax sale, all is not lost–you still have the right to get the property back through the statutory right of redemption.
But a case decided by the Tennessee Court of Appeals and published today throws cold water on a delinquent taxpayer’s ability to sell his statutory right of redemption.
In the case of Madison County, Tennessee v. Delinquent Taxpayers for 2012, the Court was faced with some interesting facts.
Mr. and Mrs. Sills owned a home in Jackson, Tennessee. At a delinquent tax sale, their property was purchased by H&W Development for $150,000, subject to the right of redemption. About six weeks later, Mr. and Mrs. Sills sold to Thomas Hyde any and all rights, if any, they had in the property, including the right to redeem (i.e., repurchase the property upon payment of back taxes, penalties, costs, and interest) pursuant to T.C.A. 67-5-2701.
Mr. Hyde filed a motion in the Madison County Chancery Court to redeem the property and tendered $19,437.11 to the court, representing the amount due to redeem the property. The court denied Mr. Hyde’s motion to redeem the property based on the language of the redemption statute defining a person entitled to redeem, T.C.A. 67-5-2502(c)(1)(B). It provides that a person entitled to redeem is “an interested person . . . as of the date of the sale and the date the motion to redeem is filed.”
Since Mr. Hyde had no interest in the property as of the date of the tax sale, the court determined that he was not a person entitled to redeem. In other words, the court read the statute to require that a person entitled to redeem had be to an interested person as of the date of the sale AND the date the motion to redeem is filed. In other words, the court read the statute precisely as it is written.
The Tennessee Court of Appeals agreed with the Chancery Court that the statute is clear and unambiguous, and that a person entitled to redeem must be an interested on both key dates–the date of the tax sale AND the date the motion to redeem is filed.
As a result of the Court of Appeals decision, Mr. Hyde was out of luck–he could not redeem the property.
An interesting side note is that the Western District of the Court of Appeals has reached a conflicting, contrary and opposite decision in a case on similar facts. In City of Chattanooga v. Tax Year 2011 City Delinquent Real Estate Taxpayers, the Court held that a couple who purchased a homeowner’s interest in property after a tax sale was entitled to redeem the property under the same definition considered by the Court in the Madison County, Tennessee case.
Due to the split in legal authority arising from these two different opinions from the Court of Appeals, it seems likely that the Tennessee Supreme Court will want to weigh on this question. Until then, the better part of discretion would  argue in favor of not transferring or selling one’s right of redemption.