Heartwood 88, Inc. v. Montgomery County (2004)
Citation: 156 Md. App. 333; 846 A.2d 1096 · Court: Court of Special Appeals of Maryland (then Maryland’s intermediate appellate court, since renamed the Appellate Court of Maryland) · Decided: April 14, 2004
A maryland decision on the refund rate owed to a tax-sale purchaser when the underlying sale is void because the taxes had actually been paid — distinguishing a void sale from a redemption.
Facts
Heartwood 88, Inc., a tax-sale purchaser, bought certificates at a Montgomery County tax sale for properties on which the taxes had in fact already been paid, so the sales should never have occurred. When the error was discovered and the sales voided, the County refunded Heartwood the sums it had paid. The dispute was over the interest rate on that refund: Heartwood argued it was entitled to the high statutory redemption interest rate that an owner must pay to redeem, while the County contended that a void sale is not a redemption and only a lower refund rate applied.
Holding
The Court of Special Appeals held that when a county voids a tax sale of property whose taxes were already paid, the purchaser is not entitled to the elevated redemption interest rate. Because no valid sale (and therefore no redemption) ever occurred, the purchaser receives only the lower refund rate (8% on these facts), not the much higher rate the redemption statutes set for an owner buying back a validly sold property.
Reasoning
- The high statutory interest rate is a feature of redemption — the price an owner pays to undo a valid tax sale. It presupposes a sale that lawfully transferred a lien/interest to the purchaser.
- A sale of property on which taxes were already paid is void ab initio; there was nothing to redeem and no valid certificate to compensate at redemption rates.
- The purchaser is therefore made whole through a refund of what it paid plus the ordinary (lower) statutory interest applicable to erroneous collections, not the redemption rate.
Practical impact
- For investors/operators: A tax certificate bought on a parcel whose taxes were already paid is a dead asset — the buyer recovers its money back with only modest interest, not the lucrative redemption-rate return. Confirm the delinquency is real before bidding. See right-of-redemption and tax-sale-mechanics.
- For counties/taxing authorities: Voiding an erroneous sale caps the purchaser’s recovery at the refund rate, not the redemption rate.
Good-law status
Still good law for the void-sale / refund-rate distinction. The Heartwood/Montgomery County tax-sale litigation generated several related opinions in the mid-2000s (e.g., Coroneos v. Montgomery County, 161 Md. App. 411 (2005); Rios v. Montgomery County, 157 Md. App. 462 (2004); and a separate Howard County v. Heartwood 88 line on refund interest), but the 2004 holding distinguishing a void sale from a redemption was not overruled as of last_verified 2026-06-02. (The intermediate court has since been renamed the Appellate Court of Maryland.)
Why it matters
Heartwood 88 draws the bright line that a void tax sale is not a redemption: the purchaser of a non-delinquent parcel cannot bootstrap into the high redemption interest rate, eliminating a potential windfall and reinforcing pre-bid due diligence.
Related authorities
- thornton-mellon-v-dennis-2022 — discretionary attorney’s fees in Maryland redemption foreclosures.
- scott-v-seek-lane-venture-1992 — Maryland foreclosure-of-redemption set aside for inadequate notice.
Applies in →
Legal information, not legal advice. This page summarizes a court decision for educational purposes and does not create an attorney-client relationship. Verify against the primary opinion and consult a licensed attorney in the relevant jurisdiction before acting. Last verified 2026-06-02.