2020 Georgia Code
Title 48 - Revenue and Taxation
Chapter 5 - Ad Valorem Taxation of Property
Article 1 - General Provisions
§ 48-5-28. Priority of Taxes Over Other Claims; Superiority of Security Deed

1. Except as otherwise provided in Code Section 53-7-91, taxes shall be paid before any other debt, lien, or claim of any kind. The property returned, the property held at the time of returning property, and the property held after the time of returning property shall always be subject to a lien for taxes.
2. The title and operation of a security deed shall be superior to the taxes assessed against the owner of property when the tax represents an assessment upon property of the owner other than that property specifically subject to the title and operation of the security deed.

(Laws 1804, Cobb's 1851 Digest, p. 1050; Code 1863, § 742; Code 1868, § 809; Code 1873, § 812; Code 1882, § 812; Civil Code 1895, § 883; Civil Code 1910, § 1140; Code 1933, § 92-5707; Ga. L. 1953, Nov.-Dec. Sess., p. 168, § 1; Code 1933, § 91A-1023, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1980, p. 10, § 11.)

- Liens, § 44-14-320 et seq.

- For annual survey of state and local tax law, see 35 Mercer L. Rev. 281 (1983). For comment on Brown v. Nash, 216 Ga. 303, 116 S.E.2d 227 (1960), see 12 Mercer L. Rev. 425 (1961).

ANALYSIS

• General Consideration
• Priority Over Other Claims
• Property Subject to Tax Lien
• Priority of Security Deeds

General Consideration

What taxes included in term "lien for taxes."

- The words "lien for taxes," as employed in former Civil Code 1910, §§ 1140, 3329, and 3333 (see now O.C.G.A. §§ 44-14-320,48-2-56, and48-5-28) were broad and sufficient to include taxes provided for by a subsequent statute for support of the state, counties, and municipal corporations located in the state, although such tax may not be ad valorem or based on property. Atlanta Trust Co. v. Atlanta Realty Corp., 177 Ga. 581, 170 S.E. 791 (1933).

- Statute does not divest the General Assembly of power to pass other laws fixing the order of priority of other claims relative to taxes. Baggett v. Mobley, 171 Ga. 268, 155 S.E. 334 (1930).

- Provisions of former Code 1933, §§ 92-5707 and 92-5708 (see now O.C.G.A. §§ 48-2-56 and48-5-28) dealt with situations where the lien for taxes represented an assessment upon property of such owner other than that property specifically covered by the security instrument, and since sales tax was not a property tax and was not assessed against the property of the owner, these provisions were not applicable to sales tax. Williams v. General Fin. Corp., 98 Ga. App. 31, 104 S.E.2d 649 (1958).

- Statute applies to all property returned or held by a taxpayer that is subject to taxation under Ga. Const. 1877, Art. VII, Sec. II, Para. I (see now Ga. Const. 1983, Art. VII, Sec. I, Para. III). Cason v. Aldred, 175 Ga. 256, 165 S.E. 221 (1932).

- Taxes are not only against the owner, but are against the property also, without reference to judgments, mortgages, sales, transfers, or encumbrances. The only concern as to the owner is to know against whom the assessment is to be made, but the tax or lien therefor is against the property. Verdery v. Dotterer, 69 Ga. 194 (1882); Wilson v. Boyd, 84 Ga. 34, 10 S.E. 499 (1889); Decatur County Bldg. & Loan Ass'n v. Thigpen, 173 Ga. 363, 160 S.E. 387 (1931); Carroll v. Richards, 50 Ga. App. 272, 178 S.E. 178 (1934).

- Lien for taxes takes effect when, by law, in each and every year the property is made taxable, and not with the return of the property or the issuance of the execution. Wilson v. Boyd, 84 Ga. 34, 10 S.E. 499 (1889).

- Statute changes the rule that personalty is to be first applied to taxes. It is not necessary for an officer, before levying on land for taxes, to make a return of no personal property to be found. Watson v. Swann, 83 Ga. 198, 9 S.E. 612 (1889).

Parties cannot by contract defeat government right to collect taxes for which property would otherwise be liable. City of Leesburg v. Forrester, 59 Ga. App. 503, 1 S.E.2d 584 (1939).

Cited in ITT Bus. Serv. Corp. v. Roberts, 184 Ga. App. 764, 362 S.E.2d 496 (1987); Denise v. Paxson, 261 Ga. 846, 413 S.E.2d 433 (1992).

Circular priorities involving tax and judgment liens and security deeds under Georgia law shall be established according to the following rules: (1) liens for taxes shall be paid prior to all other liens against property; (2) security deeds shall be paid prior to liens for state taxes if those tax liens are not for ad valorem taxes against the property which is the subject of the security deeds at issue; and (3) judgment lien holders shall be subordinated to the preceding claims. Tuggle v. IRS, 30 Bankr. 718 (Bankr. N.D. Ga. 1983).

- Lien for municipal taxes which a city has upon property of a taxpayer is superior to the lien of a judgment creditor. This is especially true when execution has been issued against the defaulting taxpayer and entered upon the proper execution docket before the creditor's judgment was obtained. Royal Indem. Co. v. Mayor of Savannah, 209 Ga. 383, 73 S.E.2d 205 (1952).

Federal tax liens have priority over later assessed state tax liens, but federal liens are subordinate to prior filed liens of judgment creditors. Tuggle v. IRS, 30 Bankr. 718 (Bankr. N.D. Ga. 1983).

- Under Georgia law, taxes constitute a lien against the property, whether that lien is recorded or not. In re Consolidated S.E. Group, Inc., 75 Bankr. 102 (Bankr. N.D. Ga. 1987).

- Recording of the fieri facias issued by the commissioner on the general execution docket is not a condition precedent to the attachment of a lien for sales taxes. The only effect of failure to record the lien is that as against innocent purchasers the lien will be lost. State v. Atlanta Provision Co., 90 Ga. App. 147, 82 S.E.2d 145 (1954).

- Record of a transfer of a tax fieri facias is not necessary to preserve the lien as against the taxpayer nor is such record necessary to preserve the priority of the lien against others, except as to persons who may have purchased the property bona fide subsequently to the transfer. Federal Land Bank v. Farmers' & Merchants' Bank, 177 Ga. 505, 170 S.E. 504 (1933).

- When a married woman, using money from her separate estate, purchases tax executions, for taxes which are a lien on her husband's property, and where these executions are transferred to her by the proper authorities and duly recorded, they are liens on the husband's property, superior to any other lien against it. Atlanta Nat'l Bank v. Brown, 173 Ga. 213, 159 S.E. 874 (1931).

- Priorities of payment established in Ga. L. 1927, p. 195, § 5 (see now O.C.G.A. § 7-1-202), which allow payment to depositors before payments of state tax, supersede the provisions of former Civil Code 1910, §§ 1140 and 3333 (see now O.C.G.A. §§ 48-2-56 and48-5-28) which gave taxes priority over other debts. Felton v. McArthur, 173 Ga. 465, 160 S.E. 419 (1931).

- When a lender took notes and bills of sale to secure a debt, but security instruments were not recorded until after the tax liens had been entered on the execution docket, the property covered under the security instruments was property of the debtor at the time the debtor became liable for the tax and the fact that the lender foreclosed on the property and purchased the property at the foreclosure sale did not divest the tax lien, and it was proper for the state to levy the execution upon the foreclosed property then in the possession of the lender. Williams v. General Fin. Corp., 98 Ga. App. 31, 104 S.E.2d 649 (1958).

- When one tenant in common, in order to protect that tenant's interest, pays taxes and assessments on the common property, the tenant is in equity entitled to a lien against the interest of the cotenant for the cotenant's share of the taxes and assessments, which lien has the same priority as that for the taxes and assessments paid. Since liens for taxes and assessments are superior to a security deed, the cotenant's lien for reimbursement from the cotenant is also superior to a security deed given by the cotenant, whether the lien arose before or after the execution of the security deed. Bank of Tupelo v. Collier, 191 Ga. 852, 14 S.E.2d 59 (1941).

- When each of two or more creditors of a common insolvent debtor has, relative to the other, the highest lien with respect to distinct property belonging to such debtor, and when there is outstanding against the debtor a tax execution issued generally, the burden of discharging such lien should, as a general rule, be apportioned among the creditors by requiring each of the separate properties to bear its proportionate part of the taxes, according to value. Federal Land Bank v. Farmers' & Merchants' Bank, 177 Ga. 505, 170 S.E. 504 (1933).

- It is inequitable to penalize a mortgagee for protecting the mortgagee's interest in the mortgaged property through foreclosure proceedings before a final judicial determination of the mortgagor's tax liability. If the mortgagee fails to protect the mortgagee's security interest in the property, and the mortgagor's tax exemption claim is decided against the mortgagee, the mortgagee's security interest would be inferior to the taxing authority's claim against the mortgagor for delinquent taxes. Ravenwood Church v. Starbright, Inc., 168 Ga. App. 870, 310 S.E.2d 582 (1983).

Property Subject to Tax Lien

What property covered by tax lien.

- Statute applies to all property of a taxpayer that is subject to taxation under the Constitution of Georgia. A lien for taxes due the state is against both the owner and the owner's property, regardless of judgments, mortgages, sales, transfers, or encumbrances of any kind. Phoenix Mut. Life Ins. Co. v. Appling County, 164 Ga. 861, 139 S.E. 674 (1927); Armour Fertilizer Works v. Durrence, 176 Ga. 519, 168 S.E. 572 (1933).

Property returned or held at time of giving in is subject to lien of the state, which cannot be divested by sale. Bibb Nat'l Bank v. Colson, 162 Ga. 471, 134 S.E. 85 (1926).

Ownership of property at time of tax sale is entirely immaterial since a tax lien attaches to property subject to taxation from the time fixed by law for valuation of such property. Furthermore, taxes due the state are not only against the owner but against the property also, regardless of judgments, mortgages, sales, transfers, or encumbrances of any kind. City of Leesburg v. Forrester, 59 Ga. App. 503, 1 S.E.2d 584 (1939).

- It is doubted that any officer would have the authority to transfer the lien of the state for taxes to a specific fund, and thus waive the lien as against the general property of the taxpayer. It is questioned further whether the failure of the sheriff to obey such demand, if made by some other officer, could have the effect of relegating the state to a rule or other action against the sheriff for a neglect of duty. Brown v. Roach, 31 Ga. App. 476, 120 S.E. 813 (1923).

- That taxpayer is in possession of other property on which the tax fi. fa. could be levied does not affect the state's lien against the property in question. Brown v. Roach, 31 Ga. App. 476, 120 S.E. 813 (1923).

- Taxing authorities are not required to limit the levy to property of the defendant in execution which has not been alienated at the time of the levy. Reynolds v. Hardin, 187 Ga. 40, 200 S.E. 119 (1938), later appeal, 189 Ga. 589, 6 S.E.2d 913 (1940).

- When an owner of land conveys the land by warranty deed as security for a debt, and in the succeeding year fails to return the land at the time the owner returns the owner's other property for state and county taxation for that year, and after default in payment execution is issued against the owner for state and county taxes on the basis of the owner's return of other property, the lien for such taxes will attach not only to the property included in the return but also to the land which the owner has conveyed as security for debt. Decatur County Bldg. & Loan Ass'n v. Thigpen, 173 Ga. 363, 160 S.E. 387 (1931).

- Lien for all taxes is binding upon all property of the surviving obligee in the bond for title and upon the estate of the deceased obligee, such obligees being holders of the bond for title and possessing and using the property at the time of accrual of the tax. Graves v. Walker, 182 Ga. 644, 186 S.E. 820 (1936).

- Fact that the taxpayer has disposed of all property returned by the taxpayer in the years for which assessments were made against the taxpayer for the taxpayer's taxes does not discharge property subsequently acquired by the taxpayer from the lien for such taxes and from executions issued against the taxpayer for the enforcement thereof. People's Credit Clothing Co. v. City of Atlanta, 173 Ga. 653, 160 S.E. 873 (1931).

When property which was perishable or expensive to keep was sold pursuant to former Civil Code 1910, §§ 6068 (see now O.C.G.A. § 9-13-163) and 6069 (see now O.C.G.A. § 9-13-164) the short order sale divested liens on the property, and the liens attached to the proceeds of such sale. This rule will not affect property covered by a tax lien of the state, which under former Civil Code 1910, § 1140 (see now O.C.G.A. § 48-5-28) was always subject, and a sale of which under former Civil Code 1910, § 1141 (see now O.C.G.A. § 48-2-57) did not divest the lien of the state for taxes. State Revenue Comm'n v. Rich, 49 Ga. App. 271, 175 S.E. 394 (1934).

- When a fund representing both the title and the equity is before the court for distribution, the equity or interest of the grantor should first be subjected to the payment of the taxes, but when the equity is insufficient to pay the tax claims in full, since these taxes are superior to security deeds, the "title" fund must be used to pay the balance of the taxes in excess of the "equity" fund. Minchew v. Juniata College, 188 Ga. 517, 4 S.E.2d 212 (1939).

- Failure of the owner of property levied on to return the property furnishes no defense to one who purchased from the owner after the lien for taxes accrued. Winn v. Butts, 127 Ga. 385, 56 S.E. 406 (1907).

- Although a county did not have the recognized statutory option of conducting a second tax sale in order to satisfy the remainder of the tax deficiency owed, and while the assignee who took the property as a result of the second tax sale might be entitled to a refund of the purchase price, the special master's recommendation to issue a decree of fee simple title in the underlying property to the buyer at the first tax sale was upheld on appeal. DRST Holdings, Ltd. v. Agio Corp., 282 Ga. 903, 655 S.E.2d 586 (2008).

Priority of Security Deeds

Purpose of provisions relating to priority of security deeds.

- Purpose of provisions relating to priority of tax liens and security deeds is to protect holders of security deeds and bills of sale to secure debt in certain instances from having the security levied upon because of taxes owed by the owner of the equity in the property since the taxes are not directly upon the property involved in the security instrument. Williams v. General Fin. Corp., 98 Ga. App. 31, 104 S.E.2d 649 (1958).

- When, after the death of the grantor under security deeds, the equity of redemption is set apart to his widow and minor child, and thereafter the property is sold under an execution in favor of the first security deed holder, the year's support claim is entitled to the full amount of the equity of redemption, tax claims which attached to the property before the setting apart of the year's support are entitled to preference over the security deed holders to the extent that the tax claims are in excess of the portion of the taxes that could and should have been paid from the equity of redemption in the absence of a year's support, and the security deed holders are entitled to the full amount of their secured debt, less the taxes in excess of the equity of redemption. Minchew v. Juniata College, 188 Ga. 517, 4 S.E.2d 212 (1939).

OPINIONS OF THE ATTORNEY GENERAL

What taxes included in term "lien for taxes."

- Words "lien for taxes" used in former Code 1933, §§ 92-5707 and 92-5708 and Ga. L. 1937-38, Ex. Sess., p. 77, § 42 (see now O.C.G.A. §§ 48-2-56 and48-5-28) have been broadly construed by the Supreme Court to include taxes, provided for by subsequent statute, for support of the state and counties and municipal corporations located in the state, although such taxes may not be ad valorem or based on property, and sales and use taxes. 1960-61 Op. Att'y Gen. p. 529.

- An ad valorem tax lien attaches to property and follows the property even into the hands of a bona fide purchaser for value; an attempted transfer of property to evade the tax would be void. 1970 Op. Att'y Gen. No. U70-208.

RESEARCH REFERENCES

Am. Jur. 2d.

- 72 Am. Jur. 2d, State and Local Taxation, § 794 et seq.

- 85 C.J.S., Taxation, § 976.

- Priority over existing lien of statutory lien upon real property for personal property taxes, 47 A.L.R. 378; 65 A.L.R. 677.