Request By:
Mr. Robert A. Becht
Deputy General Counsel
Transportation Cabinet
Frankfort, Kentucky 40622
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Alex W. Rose, Assistant Attorney General
You have made inquiry of this office concerning the status of certain tax liens alleged to have attached to real property now owned by the state. It is our opinion that such tax liens are extinguished after legal title passes to the state.
You set out the following facts:
The property was condemned as a total taking in 1977 pursuant to court order. The Transportation Cabinet took possession soon thereafter, but the property was not deeded to the state until several years later because of a continuing dispute over the amount of compensation to be paid. Between the time of the Cabinet's taking possession and the date of the deed to the state, ad valorem property taxes were assessed against the publicly listed title holder. These assessments have never been paid. The state is now interested in deeding the property to a non-governmental entity, but local officials are insisting that the back taxes must be paid. As a consequence, an encumbrance on the title exists which limits the marketability of the property.
We begin by noting that public property held for a public purpose is exempt from taxation. Kentucky Constitution § 170. Thus, after this property came into state ownership it became exempt from taxes. Arguably, this occurred in the instant case on the date the condemnation judgment was entered even though legal title remained with a private person. However, because there are other adequate grounds for disposing of this matter, we do not offer an opinion as to whether the assessments in question were void ab initio. Instead, we will look to the legal effect of the deed of conveyance to the state.
In the majority of states it is the rule that:
". . . the acquisition of the title to land by a state or other governmental body acts to extinguish prior tax liens against the property." Anno., 158 ALR 563, 565.
It appears that Kentucky follows this rule. See City of Harlan v. Blair, Ky., 64 S.W.2d 433 (1933); Jefferson Post No. 15, etc. v. City of Louisville, Ky., 280 S.W.2d 706 (1955).
Under the above stated rule, whether or not the tax liens involved here were void from the beginning, they are now extinguished and any subsequent buyer of the property takes the property without any tax encumbrance.