Complex Georgia Property Sale Gone Wrong – Who’s Liable?

[Derrick Baldwin]

Hi Bigger Pockets community!

I'm dealing with a very complicated real estate situation in Cherokee County, Georgia, and I'm hoping to get some insights from your collective experience, particularly regarding who might be liable for the errors that occurred. And yes, I'm currently working with a lawyer, but I need to get a second opinion. I am definitely willing to pay for a good consult too if anyone has a good recommendation.

Here’s a breakdown of what happened:

1. The Original Intention (Approx. 7 Years Ago): My father (now deceased) intended to sell a group of three (3) parcels of land to a buyer, Mr. X. Everyone involved, including Mr. X, believed all three parcels were part of the deal.

2. The Critical Error at Closing: Despite the intention to sell three parcels, the legal contract signed at closing and the deed recorded with the county only listed one (1) of the three parcels. This major oversight is an error made by the closing attorney and/or the buyer's real estate agent. Mr. X closed on the deal thinking he had acquired all three parcels.

3. The Aftermath – Unknowing Ownership and Unpaid Taxes:

• Because only one parcel was legally sold, my father (and now his estate, which I inherited) unknowingly continued to own the other two parcels.
• Believing all three parcels had been sold, our family stopped paying property taxes on these two "forgotten" parcels.

4. The Tax Auction (Roughly 6 Months Ago): Due to several years of unpaid property taxes, Cherokee County recently auctioned off these two forgotten parcels.

5. Excess Funds & Redemption:

• The county has contacted me (as my father's heir) because the auction generated more money than what was owed in taxes (these are "excess funds").
  
• The county has also indicated that if the estate wants to get the properties back (redeem them), we'll need to pay the auction purchase price plus additional costs/penalties to the county and the person who bought them at the auction.

6. A Major Complication – The "Phantom Parcel" & Title Defect: This is where it gets even more complex. One of the two parcels that were auctioned has a serious title problem:

• My father supposedly acquired this particular parcel years ago from his brother (my uncle, now deceased) via a quitclaim deed.
• I've learned this quitclaim deed was likely invalid because it lacked a witness, as required by Georgia law. It was notarized by the county clerk
  
• To add another layer, my uncle's ex-wife (Mrs. Y) might now have a rightful claim to this parcel if the deed to my father was indeed invalid.

7. The Buyer's Threat: Mr. X, who bought the one parcel, is now understandably distraught. He believed he owned all three parcels and has discovered that two were sold at a tax auction (and one of those might not have even belonged to my father). He is now threatening to sue my father's estate (and by extension, me as the heir) for money over this situation.

My Main Question for the Community:

Given all these errors and complications:

• The initial mistake at closing where only one of three intended parcels was actually conveyed.
• The subsequent tax auction of the two "forgotten" parcels.
• The significant title defect on one of those auctioned parcels (the invalid quitclaim deed).

Who do you think bears the primary liability for this situation?

• 1) My late father's estate?
• 2) The closing attorney from the original sale (for the deed error and possibly not clearing title properly)?
• 3) The buyer's (Mr. X) real estate agent from the original sale?
• 4) Does Mr. X share any responsibility for not verifying what he purchased and not paying property taxes on these two parcels?
• 5) How does the invalid quitclaim deed for one of the parcels affect liability regarding that specific parcel?

I'm trying to understand the potential liabilities as I navigate this mess, including the threatened lawsuit and the issues with the county over the tax sale and excess funds. Any insights or similar experiences would be greatly appreciated.

Thanks in advance!

[Chris Seveney]

Quote from @Derrick Baldwin:

Hi Bigger Pockets community!

I'm dealing with a very complicated real estate situation in Cherokee County, Georgia, and I'm hoping to get some insights from your collective experience, particularly regarding who might be liable for the errors that occurred. And yes, I'm currently working with a lawyer, but I need to get a second opinion. I am definitely willing to pay for a good consult too if anyone has a good recommendation.

Here’s a breakdown of what happened:

1. The Original Intention (Approx. 7 Years Ago): My father (now deceased) intended to sell a group of three (3) parcels of land to a buyer, Mr. X. Everyone involved, including Mr. X, believed all three parcels were part of the deal.

2. The Critical Error at Closing: Despite the intention to sell three parcels, the legal contract signed at closing and the deed recorded with the county only listed one (1) of the three parcels. This major oversight is an error made by the closing attorney and/or the buyer's real estate agent. Mr. X closed on the deal thinking he had acquired all three parcels.

3. The Aftermath – Unknowing Ownership and Unpaid Taxes:

• Because only one parcel was legally sold, my father (and now his estate, which I inherited) unknowingly continued to own the other two parcels.
• Believing all three parcels had been sold, our family stopped paying property taxes on these two "forgotten" parcels.

4. The Tax Auction (Roughly 6 Months Ago): Due to several years of unpaid property taxes, Cherokee County recently auctioned off these two forgotten parcels.

5. Excess Funds & Redemption:

• The county has contacted me (as my father's heir) because the auction generated more money than what was owed in taxes (these are "excess funds").
  
• The county has also indicated that if the estate wants to get the properties back (redeem them), we'll need to pay the auction purchase price plus additional costs/penalties to the county and the person who bought them at the auction.

6. A Major Complication – The "Phantom Parcel" & Title Defect: This is where it gets even more complex. One of the two parcels that were auctioned has a serious title problem:

• My father supposedly acquired this particular parcel years ago from his brother (my uncle, now deceased) via a quitclaim deed.
• I've learned this quitclaim deed was likely invalid because it lacked a witness, as required by Georgia law. It was notarized by the county clerk
  
• To add another layer, my uncle's ex-wife (Mrs. Y) might now have a rightful claim to this parcel if the deed to my father was indeed invalid.

7. The Buyer's Threat: Mr. X, who bought the one parcel, is now understandably distraught. He believed he owned all three parcels and has discovered that two were sold at a tax auction (and one of those might not have even belonged to my father). He is now threatening to sue my father's estate (and by extension, me as the heir) for money over this situation.

My Main Question for the Community:

Given all these errors and complications:

• The initial mistake at closing where only one of three intended parcels was actually conveyed.
• The subsequent tax auction of the two "forgotten" parcels.
• The significant title defect on one of those auctioned parcels (the invalid quitclaim deed).

Who do you think bears the primary liability for this situation?

• 1) My late father's estate?
• 2) The closing attorney from the original sale (for the deed error and possibly not clearing title properly)?
• 3) The buyer's (Mr. X) real estate agent from the original sale?
• 4) Does Mr. X share any responsibility for not verifying what he purchased and not paying property taxes on these two parcels?
• 5) How does the invalid quitclaim deed for one of the parcels affect liability regarding that specific parcel?

I'm trying to understand the potential liabilities as I navigate this mess, including the threatened lawsuit and the issues with the county over the tax sale and excess funds. Any insights or similar experiences would be greatly appreciated.

Thanks in advance!

 Not an attorney but here are my 2 cents:

Who do you think bears the primary liability for this situation? 

First when you say legal contract, is that the purchase and sale agreement or closing documents? Was there a purchase and sale agreement?. If it was the purchase and sale agreement that stated only one property then the closing attorney did nothing wrong. If the purchase and sale said three and it was only one that was provided - then it is the attorney who closed the deal. Mr X should have requested copies of the deeds as well but really that would be an attorney blunder. So it depends what you define as "legal contract"

Second question: Was there title insurance?

Third Question: What type of deed did your father sign to the borrower?

Regarding the Quit claim deed and other parcels etc, again this all boils down to the question of the contract. If the purchase and sale had three lots and the attorney screwed up then this all falls back on the attorney. 

It sounds by what you wrote this was the attorneys screwup as the docs at closing were wrong. Personally I do not see how The estate has no dog in this fight. 

If I were the old buyer I would buy these back out of tax sale as that is probably going to be a lot cheaper than fighting this with an attorney.

Last question: was the buyer using these lots during this time or was your family? 

What should fall also on the buyer is the fact they did not confirm the deeds were recorded and the fact they did not find it odd they were only getting one tax bill when they owned three properties?