D.C. owners could receive leftover money from tax foreclosure sales

Court-appointed sellers would return money left after required payments to owners or others with a right to it. These rules would cover D.C. tax foreclosures. The claim exceptions would depend on the property's status on the tax-sale date. Claims would be required for undeveloped land last assessed below $100,000, properties in tax classes 3 or 4, and sales under section 47-1353(b). Claims would also be required when taxes owed reach at least half the latest assessed value. This debt-based rule would exempt class 1A or 1B properties with five or fewer units used as a main home by the recorded owner or, after that owner's death, an heir or beneficiary with property rights. The tax-sale buyer could prevent a court-supervised sale by showing that no money would remain for those entitled to the final balance.

Owners and interested parties could claim by answer that their equity, or financial stake, in the property exceeds the payments required to recover it. These deadlines would apply to equity claims in D.C. tax-foreclosure cases. Missing the deadline would waive the claim, subject to the court allowing extra time for good cause. Claims would generally be due within 90 days of service, or 30 days for section 47-1353(b) sales. For certain defendants, time would start when required posting and publication are both complete. Courts could allow up to 30 extra days for a good reason; otherwise, missed claims would be lost.

People paying to keep or recover property would repay the tax-sale buyer's allowed legal fees and expenses. These repayment duties would apply once the buyer properly files a foreclosure case. The basic lawyer-fee cap would be $2,100, plus $100 for the third status hearing and each later hearing. An extra $425 would apply when the buyer largely wins an opposition to an owner's or interested person's motion, or largely wins its own challenge to a court-supervised sale. Annual cost-of-living adjustments would begin January 1, 2027. Generally, the fee limits in place on the tax-sale date would apply.

Courts would face limits on undoing tax sales after a foreclosure judgment. These rules would cover efforts to undo a tax sale after a court ends the right to recover property by paying what is owed. Buyer fraud would be an exception to both the filing deadline and the limits tied to deed payment or a signed sale contract. A request to reopen the judgment or undo the sale would pause the buyer's payment deadline until the court resolves it. The filing deadline would fall one year after the foreclosure judgment. Buyers could pay for their deeds no earlier than 30 days after that judgment.

D.C. could collect overdue taxes on recording property deeds through tax sales. The act would take effect after mayoral approval or a veto override and a 30-day congressional review period.