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How the Failure to Pay Property Taxes Can Affect Ownership Rights in Tennessee

Tennessee has a statute, T.C.A. §28-2-110, which can come into play in a lawsuit about the ownership of real estate where the party initiating the lawsuit (the “Plaintiff”) is alleged not to have paid property taxes on the property at issue for more than twenty (20) years. To paraphrase the statute, it prevents anyone making a claim to real estate, or rents or profits from it, from bringing a lawsuit where that party, and those through whom that party claims her interest, have failed to pay any state or county taxes owing on the property for more than twenty (20) years.

In my estimation, the critical thing to understand about the statute is that it is a statute of limitations and does not, and cannot, divest a party of title to property or prevent a party from defending its claim to property when it is challenged by another party who initiates a lawsuit.  Furthermore, the statute cannot prevent a party who has initiated a lawsuit from defending its claim to the property when the defendant goes beyond invoking §28-2-110 and simply denying the plaintiff’s claim.  Where the defendant, through a counterclaim or otherwise, requests that the court adjudicate it to be the owner of the disputed tract, the court cannot use the statute to bar the plaintiff’s claim of ownership.

Maybe, the best way to understand the statute beyond the abstract, is to review how it has affected real parties in lawsuits. So, the following three case summaries are provided to help with that understanding.

Kinder v. Bryant (Tenn. Ct. App. 2018):  I selected this case because it seems to be a somewhat common and fairly easy to understand fact scenario in which the statute was employed as a defense. The property at issue was a forty (40) acre tract which the plaintiffs claimed to have purchased in 1980. The plaintiffs had a deed.  The plaintiffs did not record their deed until 1995. The defendants’ predecessors in interest purchased the same property in 1994. They received a deed and recorded it before 1995.  The plaintiffs filed a lawsuit to have themselves declared the owners of the property. Obviously, since there was no indication that the defendants were not bona fide purchasers without notice of the plaintiffs’ deed, and since the defendants had recorded their deed first, the plaintiffs had no chance of being declared the owners of the property based on the superiority of their title.  So, the plaintiffs claimed that they owned the property by adverse possession. Since it was undisputed that the plaintiffs had not paid any of the county taxes due on the property for over twenty (20) years, the court dismissed their case under §28-2-110. This case is an example of the statute barring a claim based on adverse possession.

Alexander v. Patrick (Tenn. Ct. App. 1983):  In this case, the plaintiff and defendant claimed ownership of the same fifty (50) acre tract of land.  Plaintiff’s claim was based on a deed as was defendant’s, but plaintiff’s deed was prior in time to defendant’s deed. The opinion does not state if, or when, the relevant deeds were filed with the register of deeds.  The proof established that defendant, and her predecessors, had paid the property taxes for more than twenty (20) years and that plaintiff, and her predecessors, had not. The court held that the plaintiff’s claim was barred by §28-2-110 and dismissed the plaintiff’s complaint. This case is an example of the statute barring a claim based on title.

Summers v. Stubblefield (Tenn. Ct. App. 2015): The plaintiff and defendant owned adjoining large tracts of land in mountainous terrain.  The plaintiff filed suit in order to have the court establish a boundary line which, of course, would establish who owned the disputed property. Both the plaintiff and defendant had deeds to their adjoining tracts, but it was obviously unclear from the deeds where the property line between their properties was. The tract in dispute as a result of the parties’ contrary positions about the boundary line consisted of 125 acres. The defendant did not file a counterclaim, but “asserted” (presumably in an answer) that he owned the disputed 125 acres based on adverse possession. The defendant also asserted that plaintiff’s claim was barred by §28-2-110. The court found that it was undisputed that plaintiff had not paid property taxes on the disputed 125 acres for more than twenty (20) years, but, nonetheless, did not dismiss plaintiff’s complaint. In fact, the court ruled that the plaintiff owned the disputed tract. How could the court have done this?  It did so because §28-2-110 did not prevent the plaintiff from defending his title when it was challenged by defendant, the plaintiff held title to disputed tract, and because the defendant had not proven that he had gained ownership of the tract by adverse possession.

One very important case involving T.C.A. §28-2-110 is Cumulus Broadcasting, Inc. v. Shim which was decided by the Supreme Court of Tennessee in 2007. In that case, the plaintiff claimed to own a small strip of land (a 20-foot wide service road) by adverse possession.  The service road was on property that, although not owned by the plaintiff, was contiguous to property owned by the plaintiff.  There was no doubt that plaintiff had met all of the elements to establish that it had adversely possessed the service road.  It was also undisputed that the defendant, not the plaintiff, had paid all of the property taxes on the road for more than twenty (20) years.  The Court carved out an exception to §28-2-110, holding that it did not apply to cases involving contiguous tracts where the area in dispute was not substantial and each property owner had paid it respective taxes.

Tennessee real estate litigation lawyers should be mindful of this statute and how it can apply to the facts of their particular cases.

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