September 15, 1998

ATTORNEY GENERAL OPINION NO. 98- 45

The Honorable Richard Alldritt

State Representative, 105th District

613 West 15th

Harper, Kansas 67058

Re:	Taxation–Judicial Foreclosure and Sale of Real Estate by County–Sales of Real Estate to Certain Persons Prohibited; Application to Mortgagees

Synopsis:	A mortgagee having a statutory right to redeem real estate pursuant to K.S.A. 79-2803 may not purchase that real estate, either directly or indirectly, at a public auction conducted pursuant to K.S.A. 79-2804. Cited herein: K.S.A. 79-2803; 79-2804; 79-2804g, as amended by L. 1998, ch. 188, § 5; 79-2804j, repealed by L. 1998, Ch. 188, § 11; 79-2812; L. 1994, Ch. 200, § 3; L. 1995, Ch. 254, § 8; L. 1996, Ch. 264, § 24.

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Dear Representative Alldritt:

You request our opinion regarding whether a bank, as mortgagee, may bid on property being sold pursuant to K.S.A. 79-2801 et seq., the statutes dealing with judicial foreclosure and sale of property for taxes. You are particularly interested in the provisions of K.S.A. 79-2804g, 79-2804j and 79-2812.

As a preliminary matter, to clear up some of the confusion, we review the history of K.S.A. 79-2804g and 79-2804j. Prior to 1996, these statutes were one and the same. They were first enacted in 1971 and numbered by the Revisor of Statutes as K.S.A. 79-2804g.1 Until 1995, they provided in relevant part as follows:

"(a) Whenever any tract, lot or piece of real estate is offered for sale at public auction pursuant to K.S.A. 79-2804, and amendments thereto, such tract, lot or piece of real estate shall not be sold, either directly or indirectly, to:

"(1) Any person having a statutory right to redeem such real estate prior to such sale, pursuant to the provisions of K.S.A. 79-2803, and amendments thereto;

"(2) any person who held an interest in a tract as owner or holder of the record title or any mortgagee or assignee who held an interest at any time when any tax constituting part of the county's judgment became due;

"(3) any parent, grandparent, child, grandchild, spouse, sibling, trustee or trust beneficiary of any person enumerated in paragraph (2); or

"(4) with respect to a title holding corporation, any current or former stockholder, current officer or director, or any person having a relationship enumerated in paragraph (3) to such stockholder, officer or director."2

In 1995, the Legislature removed paragraph (2) from subsection (a) and added the phrase "who held an interest in a tract as owner or holder of the record title or who held an interest at any time when any tax constituting part of the county's judgment became due" to the above quoted paragraph (3) of subsection (a).3 In 1996, the Legislature again amended K.S.A. 79-2804g, but instead of amending its then current version, the version that existed prior to the 1995 amendment was used. Thus, paragraph (a)(2) was inadvertently reinserted and the language that had been moved to paragraph (a)(3) in 1995 was inadvertently removed.4 Because there were now, though unintentionally, two different versions of the statute, the Revisor numbered the 1996 amendment as K.S.A. 79-2804j and left K.S.A. 79-2804g as it had been amended in 1995.5 To rectify this apparent error, K.S.A. 79-2804j was repealed by the 1998 Legislature, and its subsection (d), the only thing added in 1996, was amended into K.S.A. 79-2804g.6 We now turn to the current version of K.S.A. 79-2804g to address your question.

The statute now provides in pertinent part as follows:

"(a) Whenever any tract, lot or piece of real estate is offered for sale at public auction pursuant to K.S.A. 79-2804, and amendments thereto, such tract, lot or piece of real estate shall not be sold, either directly or indirectly, to:

"(1) Any person having a statutory right to redeem such real estate prior to such sale, pursuant to the provisions of K.S.A. 79-2803, and amendments thereto;

"(2) any parent, grandparent, child, grandchild, spouse, sibling, trustee or trust beneficiary who held an interest in a tract as owner or holder of the record title or who held an interest at any time when any tax constituting part of the county's judgment became due; or

"(3) with respect to a title holding corporation, any current or former stockholder, current officer or director, or any person having a relationship enumerated in paragraph (2) to such stockholder, officer or director."

Subsection (a)(1) precludes sale of real estate up for public auction under these statutes to any person having a statutory right to redeem pursuant to K.S.A. 79-2803. [We note initially that the term "person" is defined generally to include bodies corporate and bodies politic.7 The Kansas Supreme Court has used the definition in K.S.A. 77-201 Thirteenth to find that private corporations are "persons" under various Kansas statutes if the term is not specifically otherwise defined.8] Under K.S.A. 79-2803, mortgagees are listed as having a right to redeem prior to the date of the sale. Thus, it appears that real estate subject to public auction pursuant to the provisions of K.S.A. 79-2804 may not be sold to a bank that is a mortgagee eligible to redeem the property under K.S.A. 79-2803.

An argument could be made that the removal of paragraph (2) from subsection (a) in 1995 evidences a legislative intent to exclude mortgagees from the prohibition of K.S.A. 79- 2804g. However, we think it more likely that the Legislature saw this language as superfluous, or deleted it to remove the added limitation on mortgagees having an interest "at any time when any tax constituting part of the county's judgment became due." Otherwise, the statute would preclude the owner of the property from bidding, but would allow a mortgagee to bid even though the mortgagee had the same right to redeem as the owner; this result does not seem to be reasonable and should thus be avoided.9 There is nothing in the recorded legislative history to dictate a contrary conclusion.

Finally, you inquire about K.S.A. 79-2812. That provision was last analyzed by this office in Attorney General Opinion No. 97-46:

"K.S.A. 1996 Supp. 79-2812 is not limited in its application to persons having redemption rights in the property being sold. That is the function of K.S.A. 1996 Supp. 79-2804g. See also K.S.A. 1996 Supp. 79-2804j. The plain language of K.S.A. 1996 Supp. 79-2812 precludes any person owning any real property on which taxes or special assessments are delinquent from purchasing any real property at a tax foreclosure sale."

Thus, if a mortgagee is a "person" who is record owner of any real estate upon which taxes or special assessments are delinquent, the mortgagee may not purchase real estate at a tax foreclosure sale.

In conclusion, a mortgagee having a statutory right to redeem real estate pursuant to K.S.A. 79-2803 may not purchase that real estate, either directly or indirectly, at a public auction conducted pursuant to K.S.A. 79-2804.

Very truly yours,

CARLA J. STOVALL

Attorney General of Kansas

Julene L. Miller

Deputy Attorney General

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