Associates Home Equity Services Co. v. Hunt
Associates Home Equity Services Co. v. Hunt
Opinion of the Court
OPINION
Mark D. Hunt and Kelly C. Hunt signed a promissory note, secured by a deed of trust, payable to Associates Home Equity Services Company, Inc. The Hunts claim Associates’ lien was subsequently extinguished by a tax sale, though the Hunts redeemed the property from the purchaser at the tax sale. Both the Hunts and Associates filed motions for summary judgment. The trial court granted summary judgment in favor of the Hunts. We conclude Associates’ deed of trust encumbers the property.
The Facts
Summary judgment is proper when the movant establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972). The parties stipulated to the applicable facts. The Hunts purchased real property in Montgomery County in 1996. To finance the purchase, the Hunts executed a promissory note, payable to Associates (f/k/a Ford Consumer Finance, n/k/a Citifinancial Mortgage Company, Inc.), in the amount of $155,093.25. The debt was secured by a deed of trust. The Hunts used the property as their homestead. The Hunts failed to pay property taxes. In 1998, Tomball Independent School District obtained a judgment against the Hunts for the delinquent property taxes. Associates was joined as a defendant, but did not pay the taxes. The property was sold at a tax sale to satisfy the school district’s tax lien.
A third party, Bobby Granger, purchased the property at the tax sale. The Hunts redeemed the property from Gran-ger pursuant to section 34.21(c) of the Texas Tax Code. See Act of May 30, 1999, 76th Leg., R.S., ch. 1481, § 33, sec. 34.21, 1999 Tex. Gen. Laws 5109 (current version at Tex. Tax Code Ann. § 34.21(c) (Vernon Supp. 2004)). Associates then posted the property for a foreclosure sale pursuant to
In their motion for summary judgment, the Hunts argued Tomball’s tax lien was superior to Associates’ mortgage hen, and the tax foreclosure sale extinguished Associates’ hen. In its motion for summary judgment, Associates argued its hen should be “reinstated.” The trial court’s summary judgment declared Associates’ hen was “extinguished, discharged, and void” and the Hunts “shall hold such real property, fixtures and improvements, in fee, free from hen by [Associates] or any successor or assign of [Associates].” Associates filed this appeal.
Redemption
The redemption privilege was made available to delinquent taxpayers with the adoption of Article 8, § 13 of the Texas Constitution in 1876. See Tex Const, art. 8, § 13 interp. commentary (Vernon 1993). 22 David B. BROoks, Texas Practice: Municipal Law and Practice § 9.18 (2d ed. 1999). The right of redemption is also set forth in chapter 34, subchapter B of the Tax Code. Act of May 30, 1999, 76th Leg., R.S., ch. 1481, § 33, sec. 34.21(c), 1999 Tex. Gen. Laws 5109 (current version at Tex. Tax Code Ann. § 34.21(c) (Vernon Supp. 2004)). The applicable version of § 34.21(c) provides:
If real property that was used as the owner’s residence homestead ... when the suit or the apphcation for the warrant was filed has been resold by the taxing unit under Section 34.05, the owner of the property having a right of redemption may redeem the property on or before the second anniversary of the date on which the taxing unit files for record the deed from the sheriff or constable by paying the person who purchased the property from the taxing unit the amount the purchaser paid for the property, the amount of the fee for filing the purchaser’s deed for record, the amount paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption premium of 25 percent of the aggregate total if the property is redeemed in the first year of the redemption period or 50 percent of the aggregate total if the property is redeemed in the second year of the redemption period.
Id. “The right of redemption does not grant or reserve in the former owner of the real property the right to the use or possession of the property, or to receive rents, income, or other benefits from the property while the right of redemption exists.” Act of May 30, 1999, 76th Leg., R.S., ch. 1481, § 33, sec. 34.21(h), 1999 Tex. Gen. Laws 5111 (current version at Tex. Tax.Code Ann. § 34.21(h) (Vernon Supp. 2004)).
A purchaser at a tax sale receives a conditional estate, which is subject to defeat upon “compliance with the redemption laws by those entitled to redeem.” See Reynolds v. Batchelor, 216 S.W.2d 663, 666 (Tex.Civ.App.-Fort Worth 1948, writ ref'd n.r.e.); see also O’Hanlon v. Morrison, 187 S.W. 692, 696 (Tex.Civ.App.-Amarillo 1916, no writ); see Act of May 27, 1995, 74th Leg., R.S., ch. 1017, § 1, sec. 33.95, 1995 Tex. Gen. Laws 5086 (amended 1997) (current version at Tex. Tax Code Ann. § 33.95 (Vernon 2001)). Redemption does not give new title. See Bente v. Sullivan, 52 Tex.Civ.App. 454, 462, 115 S.W. 350, 353 (1908, writ ref'd). In Reynolds v. Batchelor, the court said that one under an obligation to pay property taxes who “undertakes to purchase the tax title will be estopped to claim that he did anything other than redeem the property from the tax sale.” Reynolds, 216 S.W.2d at 667. The court stated as a general principle an owner who
The Hunts did not purchase the property at the tax sale.
The Hunts rely on cases holding foreclosure of a senior lien extinguishes junior liens, but we do not read the cases as determinative of the effect of redemption. Both Diversified Mortgage Investors v. Lloyd D. Blaylock General Contractor, Inc., 576 S.W.2d 794, 806 (Tex. 1978) and National Western Life Ins. Co. v. Acreman, 425 S.W.2d 815, 816 (Tex. 1968) addressed whether a mechanic’s lien or a prior-recorded deed of trust took priority. Redemption was not at issue in either case. Likewise, National Loan Investors, L.P. v. Spring Independent School Dist., No. 01-94-00659-CV, 1995 WL 489441 (Tex.App.-Houston [1st Dist.] 1995, no pet.) (not designated for publication) did not involve redemption.
Generally, a deed of trust is a mortgage with a power to sell on default. See Starcrest Trust v. Berry, 926 S.W.2d 343, 351 (Tex.App.-Austin 1996, no writ). The Hunts admit the debt still exists, but they argue it is now unsecured. But redemption merely relieves the property of the tax sale. When the Hunts redeemed the property, they restored the title to what it was before the tax sale, except the tax lien has been discharged. They did not discharge their agreement with Associates reflected in the deed of trust.
. The Tax Code provides in part as follows: “A purchaser for value at or subsequent to the tax sale may conclusively presume the validity of the sale and takes free of any claim of a party with a prior interest in the property subject to the provisions of Section 16.002(b), Civil Practice and Remedies Code, and subject to applicable rights of redemption.” Act of May 24, 1995, 74th Leg., R.S., ch. 1017, § 1, sec. 33.95, 1995 Tex. Gen. Laws 5086 (current version at Tex. Tax Code Ann. § 33.95 (Vernon 2001)). See also Tex. Tax Code Ann. § 33.50(c) (Vernon 2001).
. Unpublished cases have no precedential value. See TexR.App. P. 47.7.
.Apparently, the deed of trust in the record is missing a page.
Dissenting Opinion
REVERSED AND REMANDED.
dissenting.
I respectfully dissent. Wfliat the majority has done is judicially create an exception to the long standing rule that the foreclosure of a superior lien
On October 21, 1986, Mission Bend Municipal Utility District No. 1 (“the District”) filed the tax suit against Highway 6 Venture to collect taxes assessed against the 61 acres of land during 1985, and to obtain the judicial foreclosure of the District’s tax hen.
Sunbelt, the record hen holder on the property, was not made a party to the tax suit. By certified mail from the District’s attorney, Sunbelt received written notice on November 3, 1986, of the tax suit and the fact that its hen interest in the property was subject to cancellation by virtue of the District’s tax hen.
Although Highway 6 Venture was served with citation, it failed to appear in the tax suit. On December 19, 1986, the District was granted a default judgment against Highway 6 Venture for $105,445.88, and for the judicial foreclosure and sale of the property. On December 26, 1986, Sunbelt received written notice, again by certified mail from the District’s attorney, that judgment in the tax suit had been entered, and that Sunbelt’s interest in the property could be lost if it did not take immediate action.
In this case, Associates was joined as a defendant
There is no reason to lengthen this dissent by describing the mischief that might be created between third party purchasers at tax sales and potential redemptors towards lien holders to avoid the “foreclosures at tax sales do not extinguish liens” rule established by the majority or even the mischief that might be created be
. It is undisputed the tax lien was superior to Associates’ lien. Priority of Tax Liens Over Other Property' Interests. See Tex Tax Code Ann. § 32.05 (Vernon 2002).
. Diversified Mortg. Investors v. Lloyd D. Blay-lock Gen. Contractor, Inc., 576 S.W.2d 794, 806 (Tex.l978)(op. on reh’g); Irving Lumber Co. v. Alltex Mortg. Co., 468 S.W.2d 341, 343-44 (Tex. 1971).
. As a part of the factual "set-up” this is clearly dicta, but it shows how the industry and the courts viewed the rule.
. An unbroken line of decisions by Texas Courts, dealing with a variety of statutes, has uniformly held that a lien holder must be joined as a party in a suit to enforce a tax lien, and that any judgment rendered absent the joinder of such a lien holder is defective in that it does not dispose of the rights of all of the parties interested in the property. Coakley v. Reising, 436 S.W.2d 315, 318 (Tex. 1968), appeal after remand sub nom., Coakley v. Crow, 457 S.W.2d 431, 433 (Tex.Civ.App.-Corpus Christi 1970, writ ref'd n.r.e.), cert. denied, Coakley v. Reising, 402 U.S. 906, 91 S.Ct. 1376, 28 L.Ed.2d 646 (1971); Murphee, 817 S.W.2d at 851; Norris v. Harry Hott & Assocs., Inc., 612 S.W.2d 630, 632 (Tex.Civ.App.-Dallas 1981, no writ); Sanchez v. Hillyer-Deutsch-Jarratt Co., 27 S.W.2d 634, 635 (Tex.Civ.App.-San Antonio 1930, writ ref'd); State Mortgage Corp. v. Groos, 12 S.W.2d 260, 262 (Tex.Civ.App.-San Antonio 1928, writ dism’d w.o.j.); Ballv. Carroll, 42 Tex.Civ.App. 323, 92 S.W. 1023, 1026 (Galveston 1906, writ ref'd).
. The judgment reflects there was $8,316.84 of taxes and attorneys' fees owing against the home with a fair market value of $111,160.
. Throughout my private practice, I perhaps mal-practiced the few lender clients I was fortunate to represent when I advised them to "bid-in” their liens at tax sales or forever lose them.
Reference
- Full Case Name
- ASSOCIATES HOME EQUITY SERVICES COMPANY, INC., F/K/A Ford Consumer Finance Company, Inc. N/K/A Citifinancial Mortgage Company, Inc., Appellant, v. Mark D. HUNT and Kelly C. Hunt, Appellees
- Cited By
- 12 cases
- Status
- Published