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Court Preliminarily Approves Settlement in Class Action Involving Tax Sales

HGD Partner, Lew Garrison, is co-class counsel in a case which will provide relief to thousands of Jefferson County, Alabama property owners who had property sold at tax sales. Each October, the Jefferson County Tax Collector mails tax notices to property owners throughout Jefferson County. If the tax remains unpaid, the property on which the tax is levied may be sold at the annual tax sale, held each May, to the highest bidder.

Tax sale purchasers (investors) often make overbids – bids in excess of the taxes, interest, penalties, and costs due, which result in excess funds being received by the Jefferson County treasurer when properties are sold at tax sales. The treasurer deposits the excess funds into a segregated account which earns interest. If a property owner elects to redeem property which has been sold at the tax sale, the redeemer is required to pay interest at the rate of 12% on any overbid amounts which were collected by the Jefferson County treasurer. The interest earned on the redeeming tax payers’ excess funds, while on deposit in the redemption fund, is neither credited to the tax payer nor paid to the investor.

The Plaintiffs in this litigation contended that the tax payers are the owners of the interest on the excess funds being held in the redemption fund. This settlement will return to the tax payers the amount of interest earned on overbids attributable to their properties, net of costs, and attorneys fees. The amount of money which will constitute the settlement fund in this case is approximately $4 million. On March 6, 2008, the Jefferson County Circuit Court, Honorable Michael Graffeo, will hold a fairness hearing to determine whether the settlement should be finally approved. 

Download a copy of the settlement summary (in PDF format) here

For more information concerning Tax Sales, please fill out and submit our confidential questionnaire, or contact us by email at lee@hgdlawfirm.com, or phone Heninger Garrison Davis at 1-800-241-9779.

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