Rutherford County, Tennessee v. Delinquent Taxpayers Of Rutherford County, Tennessee, M2016-01254-COA-R3-CV

Background

Terry Lounds owned residential real property sold at a Rutherford County delinquent tax sale on June 20, 2013; Thomas Hyde purchased it for $50,000 and sale was confirmed July 17, 2013, starting the one-year redemption period.
The property was vacant and dilapidated (leaking roof, mold, no electricity, burst pipes). Hyde took possession after the sale, performed repairs and improvements (roof replacement, HVAC, drywall/carpet work, painting, bathroom fixtures), spent ~ $41,900, then rented the property and collected $30,525 in rent.
On June 23, 2014, Lounds paid $19,002.87 to redeem the property and immediately quitclaimed his interest to Barry Gregory; Hyde contested the redemption and alternatively sought reimbursement for his expenditures to preserve value.
The chancery court confirmed the redemption, vested title in Gregory, awarded Hyde reimbursement only for property taxes he paid ($1,937) plus return of purchase price with interest, and allowed Hyde to retain rents collected during the redemption period.
Hyde appealed, challenging the validity of the redemption and seeking additional reimbursement for preservation expenses; the Court of Appeals affirmed as modified.

Issues

Issue	Hyde's Argument	Lounds/Gregory's Argument	Held
Whether Hyde waived right to appeal the validity of the redemption by accepting the trial-court payment	Acceptance did not bar challenging redemption’s validity	Acceptance of judgment bars attacking underlying basis of that judgment	Hyde waived challenge to redemption’s validity by accepting the judgment; he did not waive challenge to the amount awarded (i.e., reimbursement)
Whether Hyde had to obtain a writ of possession before entering and expending on vacant property	No — property was vacant so writ not required	Statute/forcible-entry principles require judicial process before entering	Writ unnecessary here because property was vacant; trial court erred in denying reimbursement solely for failure to obtain writ
Whether Hyde’s expenditures were compensable under Tenn. Code Ann. § 67-5-2704(a) (preserve value/prevent permissive waste)	Repairs/replacements were necessary to prevent further deterioration and preserve value (roof, mold remediation, HVAC, etc.)	Much of work were improvements to make the house habitable and thus non-compensable	Hyde proved only roof replacement ($11,137) was compensable; other claimed expenses were either improvements or not proven with sufficient detail, so not reimbursable under the statute
Whether Hyde must account for rents collected during redemption	He should not have to surrender rents collected from third-party tenant	Redeeming taxpayer entitled to credit for fair rent; purchaser must account for rents	Under Title 67 (tax-sale scheme), purchaser who took possession and rented to a third party may keep rents; trial court did not err in allowing Hyde to retain rents

Key Cases Cited

Bond v. Greenwald, 51 Tenn. 453 (Tenn. 1871) (acceptance of judgment does not automatically waive right to appeal amount but may affect inconsistent challenges)
McClendon v. House, 637 S.W.2d 883 (Tenn. Ct. App. 1982) (acceptance of judgment amount does not bar appeal challenging damages inadequacy)
Tech Hills II Assocs. v. Phoenix Home Life Mut. Ins. Co., 5 F.3d 963 (6th Cir. 1993) (acceptance of a judgment on certain theories can estop appeal on inconsistent contract theories)
94th Aero Squadron of Memphis, Inc. v. Memphis-Shelby Cty. Airport Auth., 169 S.W.3d 627 (Tenn. Ct. App. 2004) (forcible entry and detainer statutes require writ of possession before reentry to prevent breaches of the peace)
U.S. v. Hougham, 364 U.S. 310 (U.S. 1960) (acceptance of payment of an unsatisfactory judgment does not, standing alone, constitute accord and satisfaction when appealing damages amount)
Shelton v. Sears, 57 Tenn. 303 (Tenn. 1872) (interpretation of purchaser’s duty to account for rents under older statutes governing forced sales)