In 1996, Zarmina Azadozy purchased her property at a mortgage lender's foreclosure sale. But she failed to record her deed.
For several years, she then forgot to pay the property taxes on the property. In 2003, the county tax collector sold the property for unpaid property taxes. The successful high bidder at the tax sale paid more than the amount of unpaid property tax.
Although Azadozy was not the legal owner of record because she failed to record her foreclosure deed before the tax sale, she sued the county for the surplus proceeds exceeding the amount of property taxes owed.
The county attorney responded that because Azadozy was not the legal titleholder at the time of the tax sale, she was not entitled to the excess proceeds above the amount owed for unpaid property taxes.
If you were the judge would you rule Azadozy is entitled to the excess property-tax sale proceeds although she failed to record her deed before the tax sale?
The judge said no!
Azadozy does not qualify as the legal owner of the property because she did not record her foreclosure deed before the property-tax sale, the judge explained.
"The recording statutes only protect the interest of a bona fide purchaser or encumbrancer that is created by a recorded instrument, by granting priority over all prior unrecorded and unknown interests," he emphasized.
Because Azadozy failed to record her deed before the property-tax sale, she is not entitled to the excess tax-sale proceeds exceeding the amount of unpaid property taxes, the judge ruled.
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