Did Arkansas Act 1231 apply to tax-delinquent land certified before the Act took effect but sold afterward?

Plain-English summary

The Arkansas Attorney General concluded that Act 1231 applied to every tax-delinquent parcel the Commissioner of State Lands had not sold by August 16, 2013. The opinion's central reason was that the Act's three changes were "triggered at or by the sale of the parcel, not its certification."

At the time, those changes affected the minimum acceptable bid, shortened the post-sale redemption period from 30 days to 10 days, and shortened the period for challenging a conveyance from one year to 90 days. Because a future sale triggered those consequences, the AG concluded that applying the Act to previously certified but unsold land "is not retroactive."

Earlier notices stating the old rules did not prevent the Act from applying. The opinion said the prior notice was correct when issued and that, if sale notice was properly given under Act 1231, the previous notice would not "preclude the Act's application to anyone."

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical significance for affected readers

Owners of tax-delinquent property

For parcels still unsold on the Act's effective date, the opinion treated the sale as the event that activated the new redemption and challenge periods. It did not treat certification or an earlier notice as fixing the old periods permanently.

State land officials

The opinion said Act 1231 applied to auction and negotiated sales occurring after August 16, 2013. It also stated that the Commissioner had to issue the post-sale redemption notice required by the new law.

Tax-sale bidders and lawyers

The AG expressly limited the analysis to landowners' rights and did not address "the potential or actual purchasers' rights." The page therefore should not be read as deciding purchaser-side issues.

Common questions

Did the date a county certified the land control which law applied?

No. The opinion said the three statutory changes were triggered by sale, not certification, so previously certified but unsold parcels came under Act 1231 when sold after its effective date.

Did applying the new law to an already certified parcel make it retroactive?

The AG said no. The Act changed the future legal consequences of a future sale, even though earlier steps such as certification and notice had already occurred.

Could an earlier notice promising a 30-day redemption period preserve that period?

The opinion said no, assuming notice of the sale was properly given under Act 1231. It reasoned that the earlier notice stated the law as it existed when sent and that the law could change before sale.

Did the opinion cover parcels sold before August 16, 2013?

No new Act 1231 rule applied to those completed sales. The opinion stated that none of the three changes would apply to parcels sold before the effective date.

Background and statutory framework

Act 1231 changed three parts of the tax-sale process. The opinion said it lowered the minimum acceptable auction bid to delinquent taxes, penalties, interest, and sale costs; reduced the post-sale redemption period to 10 days; and reduced the limitations period for challenging the conveyance to 90 days.

The AG examined the certification statute, pre-sale notice rules, auction and negotiated-sale provisions, the post-sale redemption notice, and the limitations period. It also discussed Jones v. Flowers on tax-sale notice and Arkansas cases on legislative changes to redemption periods.

Citations discussed

• A.C.A, § 26-37-101(a)(1) (Repl. 2012), cited for certification of tax-delinquent land
• A.C.A. § 26-37-301 (Repl. 2012), cited for notice to the landowner
• A.C.A. §§ 26-37-201(a)(5) and —202 (Repl. 2012), cited for the auction and minimum-bid framework
• Jones v. Flowers, 547 U.S, 220 (2006), discussed on due-process notice before a tax sale
• Aluminum Co. of America v. Neal, 4 Ark. App. 11, 15, 626 S.W.2d 620, 621-22 (1982), cited in the retroactivity discussion
• Northern Road Imp. Dist. v. Meyermann, 169 Ark. 383, 275 S.W. 762 (1925), cited on changing redemption periods before a sale

Source

• Landing page: https://arkansasag.gov/divisions/opinions-foia/attorney-general-opinions-search/

Original opinion text

STATE OF ARKANSAS

THe ATTORNEY GENERAL
Dustin McDANIEL

Opinion No. 2013-059

August 15, 2013

The Honorable John Thurston
Commissioner of State Lands
109 State Capitol Building
Little Rock, Arkansas 72201

Dear Commissioner Thurston:

You have requested my opinion on Act 1231 of 2013, which deals with the sale of tax-delinquent properties. Because the Act lacks an emergency clause, its effective date is August 16, 2013.’ You say that your questions arise “because while the effective date of the Act is...August 16, 2013, it is unclear whether the changes will affect the sale of properties already certified to this office.”

You then ask whether, as a threshold matter, the Act applies to those properties. If it does, you have several more questions about the specific way in which the foregoing three changes apply. I have paraphrased your questions as follows:

1. Does Act 1231 affect any real property certified to the state before the
   effective date of the Act, which is August 16, 2013?

2. Properties that the Commissioner’s office has offered and will be offering
   for sale at public auction in 2013 were required to be certified to the state no later than July 1, 2013. These properties were tax-delinquent in 2008. In 2011, the Commissioner began sending and publishing notices regarding sales that would occur in 2013. These notices stated that the law as it then

' The reasons for arriving at this date are explained in Op. Att’y Gen. 2013-049.

323 CENTER STREET, SUITE 200 * LiTTLE Rock, ARKANSAS 72201 TELEPHONE (501) 682-2007 * Fax (501) 682-8084 INTERNET WEBSITE * http://www.ag.state.ar.us/

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 2

existed, which was that the owner would have 30 days from the date of sale to redeem the property, and the newspaper publication stated the older formula for determining the minimum bid.

a. Do these notices preclude the application of the Act to the parcels currently certified to the Commissioner?

b. Ifnot, then how would the Act’s three changes affect these parcels?

3. If a parcel does not sell at public auction, it is then eligible to be sold
   through the negotiated-sale process. How would the Act’s three changes apply to a negotiated sale?

RESPONSE

For purposes of your questions, Act 1231 effects three changes in Arkansas law, each of which is triggered at or by the sale of the parcel, not its certification. And because each of your questions refers to parcels that have not been sold, Act 1231 applies to all those parcels. Therefore, in my opinion, the answer to Questions 1, 2(b), and 3 is that Act 1231 applies straightforwardly to each of the parcels that the Commissioner has not sold as of August 16, 2013. As explained more fully below, this does not mean that Act 1231 is retroactive, a concern that seems to underlie your questions. Regarding Question 2(a), as explained more fully below, it is my opinion that the content of the prior notices will not “preclude the application of the Act to those parcels.”

DISCUSSION

It will be helpful to explain the relevant procedures regarding tax-delinquent properties, noting especially how these procedures were altered by Act 1231.

A parcel of real property must be tax-delinquent for at least one year before the relevant county certifies the land to the Commissioner of State Lands “for collection or sale.”? When the Commissioner receives the certification, the title to the land immediately vests in the State of Arkansas in the care of the

• A.C.A, § 26-37-101(a)(1) (Repl. 2012).

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 3

Commissioner, who must then provide notice to the landowner stating (1) that the land will be sold at a certain date if the owner fails to redeem the property; and (2) the date of the sale.’ To satisfy constitutional due-process requirements, this notice must be sent by certified mail and meet several other strict notification rules.’ But, as the U.S. Supreme Court noted in Jones v. Flowers due process does not require actual notice.°

Assuming the owner fails to redeem by the date of the sale, the Commissioner must attempt to sell the parcel at auction. This is when Act 1231’s first change comes into play. Under current law, the lowest bid the Commissioner can accept for the parcel is an amount equal to the property’s assessed value.° The successful bidder must also pay all the land’s taxes, interest, penalties and other costs.’ Act 1231 eliminates the assessed value from consideration and lowers the minimum acceptable bid to an amount equal to the sum of the “amount of delinquent-taxes, penalties, interests, and costs of the sale.”® Under both current law and Act 123 1, if the property does not sell at the auction, it can later be sold by negotiation.”

If the parcel is sold (whether at auction or by negotiation) a separate statute—and Act 1231’s second effect—comes into play. For our purposes, this statute has two requirements, First, under current law the Commissioner must notify the original owner of the post-sale right to redcem.'® Second, the Commissioner must inform

7 A.C.A. § 26-37-101(c) (vesting of the title), A.C.A. § 26-37-301 (Repl. 2012) (contents of the notice). The statute requires that the notice include other information, the specifics of which are not relevant to this opinion.

• See A.C.A. § 26-37-301.

> Jones v. Flowers, 547 U.S, 220 (2006).

° A.C.A. §§ 26-37-201(a)(5) and —202 (Repl. 2012).

” See A.C.A. § 26-37-201(c).

® Act 1231, § 3.

> A.C.A. §26-37-202.

ACA. § 26-37-202(e)(1) (“After a sale of the land by the Commissioner..including a negotiated sale, the Commissioner...shall notify the owner and all interested parties of the right to

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 4

the owner of the duration of that right, which is 30 days.'’ Act 1231 only affects the latter, reducing its duration to 10 days. Unlike the pre-sale notice, both current law and Act 1231 only require the Commissioner to send this post-sale notice by regular mail.’

For reasons that will become clear below, it is important to note that notification of the post-sale right-of-redemption is only required after the sale has occurred. Thus, the Commissioner is under no statutory obligation to provide and, concomitantly, the owner has no statutory right to be notified of (a) the post-sale right to redeem or (0) the duration of that right until after the land has been sold.

If the land was not redeemed during the post-sale redemption period (which is the same duration for sales occurring at auction or by negotiation’’), Act 1231’s third effect comes into play. Currently, a person has one year (from the date of conveyance) to initiate a lawsuit challenging the conveyance’s legality.'* Act 1231 reduces the limitations period to 90 days.’” No statute currently requires—nor does Act 1231 require—the Commissioner to notify the landowner of the statute of limitations, let alone its duration.

From this brief review, we can see that all three of Act 1231’s changes are directed to and triggered by the parcel’s sale. Accordingly, none of the Act’s three changes would apply to any parcels that were sold before the Act’s effective date, August 16, 2013. As noted above, all your questions refer to parcels that have not been

redeem the land within thirty (30) days after the date of sale paying all taxes, penalties, interest, and costs due, including the cost of the notice.”),

"Id.

"> Act 1231 of 2013, § 3. In Jones, supra note 5, the U.S. Supreme Court addressed what efforts the State must make to notify an owner prior to a tax sale, but the Court did not directly address post-sale notice. Various factors must be considered when determining whether particular notice

efforts are constitutionally sufficient. An analysis of those factors is outside the scope of this opinion.

3 ACA. § 26-37-202(e)(1).
4 A.C.A. § 26-37-203(b).

'S Act 1231 of 2013, §4.

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 5

sold.’® Therefore—in response to Questions 1, 2(b), and 3—Act 1231 applies straightforwardly to every unsold parcel whose titles the Commissioner holds on and after August 16, 2013."

One might object that this reading of Act 1231 ignores the presumption that statutes are not retroactive. Generally, “statutes are to be construed as having a prospective operation, unless the purpose and intent of the Legislature to give it retrospective effect is expressly declared or is necessarily implied from the language used.”

Although it is not entirely clear, the concern about retroactivity may underlie your question’ focus on the certification date, and especially Question 2’s focus on the timing and contents of the notification letters. You seem concerned that if Act 1231 applied to parcels that had been certified to the Commissioner before the Act’s effective date, then the Act would be retroactive, possibly contrary to the above presumption. But given the definition of retroactivity, which is explained below, this concern is, in my opinion, unfounded.

Courts state the foregoing rules, in one form or another, far more often than they explain what it means for a statute to be retroactive in the first place. A retroactive law is one that alters the past legal consequences of a past action.'? Since Act

'© Apparently, the Commissioner holds a sub-set of parcels that were offered for sale but never actually sold. Given that Act 1231 only applies at a parcel’s sale, the next time these parcels are offered for sale after Act 1231’s effective date, its provisions will apply.

'? Regarding Question 3, any parcel that is eligible for a negotiated sale has not yet been sold for purposes of the relevant statutes. If the parcel were to sell at a negotiated sale, then that sale would initiate the post-sale redemption and statute-of-limitations timeframes, which are the same timeframes that apply to land sold at auction.

"8 Aluminum Co. of America v. Neal, 4 Ark. App. 11, 15, 626 S.W.2d 620, 621-22 (1982) (holding a statute to be retroactive yet not disturbing plaintiff’s vested rights); see also 2 Sutherland Statutory Construction, 7th ed., §§ 41.1-41.2.

E.g., Northeast Hospital Corp. y. Sebellius, 657 F.3d 1, 14 (D.C. Cir. 2011); American Min. Congress v. U.S. E.P.A., 965 F.2d 759, 769 (9th Cir. 1992); 20th Century Ins. Co. v. Garamendi, 878 P.2d 566, 607 (Cal. 1994) (en banc). Given the wording of your background facts and questions, you seem to be asking about how Act 1231 applies to the relevant set of parcels in light of the landowners’ rights. Therefore, I will not address any issues relating to the potential or actual purchasers’ rights.

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 6

1231’s changes are triggered at and by the parcel’s sale, and that sale has not yet occurred, Act 1231 is not retroactive with respect to the sale. Granted, as explained above, the relevant statutes require the performance of a series of official actions (e.g., certification, notification of the sale date, etc.) before the sale of the tax-delinquent property. But, as a leading treatise explains, “[a] statute is not rendered retroactive merely because the facts upon which its subsequent action depends are drawn from a time antecedent to its effective date.””? Act 1231 operates only on events that take place after the Act’s effective date, altering the future legal consequences of a future event, namely, the sale. Therefore, Act 1231 is not retroactive.

Question 2(a) seems to have a slightly different focus than your other questions. This question focuses on the fact that the landowners have received months old (and, in many cases, years old) notifications gratuitously explaining to them the pre-Act 1231 durations of the post-sale right-of-redemption and the statute-of- limitations. You ask, “Do these notices preclude the application of the Act to the parcels currently certified to the Commissioner?”

In my opinion, the answer to this question is “no.”

Although you have not stated as much, I assume the question is prompted by a concern that those who were notified of the 30-day post-sale right of redemption might claim they were misled into believing that they would have this right regardless of any subsequent change in the law. As explained above, on page three, Act 1231 requires the Commissioner to issue a post-sale notice of the right to redeem. This notice will inform the former landowner of the 10-day right of redemption. Persons receiving that notice clearly will have no claim that the Act cannot apply to them owing to the previous notice.

But what about someone who did not receive the new notice? If notice of the sale is properly given pursuant to Act 1231, it is my opinion that the previous notice will not preclude the Act’s application to anyone, including someone who, for some reason, did not receive the Act 1231 notice. The information in the earlier notice was (presumably) a correct statement of the law as it existed at the time,

*° 2 Sutherland Statutory Construction, 7th ed., § 41.1.

The Honorable John Thurston
Commissioner of State Lands
Opinion No. 2013-059

Page 7

and there is always a possibility that the law will have changed sometime after the previous notice was given.

Additionally, Arkansas’s courts have long held that the legislature retains authority to change its approach to collecting delinquent taxes, including changing the time periods within which redemption or other actions must occur. Where, as here, the sale of the property has not yet occurred, the fact that a new law shortens certain post-sale time periods would appear to give the former owner no cognizable legal claim.

Therefore, in my opinion no claim arises regardless of whether the person previously received notice of the prior or new law.

Assistant Attomey General Ryan Owsley prepared this opinion, which I hereby approve.

Sincerely,

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Sosrn MCBANIEL

Attorney General

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"1 See, e.g., Northern Road Imp. Dist. v. Meyermann, 169 Ark. 383, 275 S.W. 762 (1925) (where the legislature shortened the time for redemption of tax delinquent property, the new law did not impair any vested property right of the owner).