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ATTORNEYS | Practice Notes

Indiana

Tax Deeds

Kumar v Bay Bridge, 903 NE2d 114 (Ind Ct App 2009).

Facts:Bay Bridge LLC (Bay Bridge) acquired property from Bank One Trust Company, a successor-in-interest to INB National Bank, on December 13, 2004. Shortly after Bay Bridge recorded the trustee's deed an interest in the real estate was claimed by Atul Kumar. Kumar purchased the real estate at a tax sale on September 25, 2001, because INB National Bank had not paid the property taxes. Despite tax sale notices sent INB National Bank being returned undeliverable, the Lake circuit court issued a tax deed to Kumar on January 27, 2003. Kumar failed to record the deed at that time. It was not until a couple of weeks after Bay Bridge filed a complaint to quiet title on the real estate that Kumar recorded his tax deed.

Bay Bridge argued that Kumar's tax deed was void and/or that it was abona fidepurchaser of the property. Kumar challenged the jurisdiction of the Lake Superior Court, arguing that Bank One could not convey property it did not own, and that adequate notice of the tax sale was provided to the record owner of the real estate.

The trial court granted Bay Bridge's motion for summary judgment. Specifically the court found "the notice provided to Bay Bridge's predecessor in interest in the property is insufficient to satisfy due process. As such the tax sale and the tax deed conveying the property to Kumar were void." Kumar appealed.

Holding:Affirmed. The court of appeals looked at whether the undisputed facts established that Bay Bridge was abona fidepurchaser for value. Indiana has long recognized that to qualify asbona fidepurchaser one has to purchase in good faith, for a valuable consideration, and without notice of the outstanding rights with others. Along with thebona fidepurchaser doctrine, Indiana has a race-notice statute. Indiana Code Section 32-21-4-1 provides in part &€¦."Any interest in the land must be recorded in the recorder's office of the county where the land is situated and a conveyance, mortgage, or lease takes priority according to the time of its filing."

With regard to notice, the law recognizes both constructive and actual notice. Constructive notice is the examination of the records to construct a chain of title for the property. The purchaser examining the records is on notice of all the facts recited in the records showing any encumbrances. Bay Bridge did not have constructive notice of Kumar's interest in the real estate at issue because he failed to record his tax deed as required by the Indiana Code Section 32-21-4-1 and never recorded until Bay Bridge filed its complaint.

The court recognizes notice as actual when notice has been directly and personally given to the person notified. Actual notice can also be implied or inferred from the fact that the person charged had means of obtaining knowledge which he or she did not use. Kumar could not show any evidence that Bay Bridge had actual notice of his claimed interest in the property.

Therefore, Bay Bridge established that it was abona fidepurchaser for value because of the lack of notice on the part of Kumar.

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[Last update: 9-2-09]