In Echo Financial v. Peachtree Properties, 22 Neb. App. 898, -- N.W.2d -- (2014), Echo filed for foreclosure on a tax sales certificate issued for 2008 taxes. It alleged that in addition to delinquent property taxes, the county was owed for unpaid weed control assessments and there were special assessments due to a sanitary and improvement district (SID). The district court filed an order for summary judgment finding that Echo Financial held a valid first lien on the property and Sarpy County's weed control liens held a second priority. Later an order of foreclosure held that Echo had a first lien and the Sarpy County weed lien was junior to the interests of Echo and the SID. In addition, the property was to be sold at a sheriff's sale subject to unpaid real property taxes for the second half of 2011 and 2012.

Sarpy County appealed the district court decision in three areas: 1) granting Echo Financial's motion for summary judgment, 2) ordering that the weed liens were junior to the interests of Echo and the SID, and 3) failing to find that Sarpy County had outstanding general tax liens and ordering the property to be sold subject to the liens rather than ordering the liens to be paid from the proceeds of the sheriff's sale.

The Court of Appeals found that the district court properly granted summary judgment because Echo showed that it owned the tax sales certificate and was presumptively entitled to be paid for redemption from the tax sale. Summary judgment is proper if the pleadings and admissible evidence offered at the hearing shows that there is no genuine issue of any material facts or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to as a matter of law.

The second assignment of error focused on the junior status of the weed lien. Weed liens are a type of special assessment. Section 77-209 provides that special assessments take priority over all other encumbrances and liens except the first lien of general taxes. The Supreme Court upheld the district court's ruling that Sarpy County's weed liens were junior to Echo's general lien represented by the tax sales certificate.

In addition, the weed liens are junior to the interests of the SID. Legislation enacted in 1996 specifically excludes special assessments levied by SIDs from the effects of judicial foreclosure. (LB277 (2015), which will take effect this fall, will apply the same exemptions when a tax deed is pursued for real estate on which special assessments levied by an SID have not previously been offered for sale by the county treasurer.)

Finally the Court examined whether the property could be sold subject to the general tax liens for the second half of 2011 and 2012. The title conveyed under a tax deed is not derivative, but the purchaser takes a new title free from any encumbrances, claims or equities connected with the prior title. Echo argued that the county should apply for a tax sale certificate in order to collect any liens remaining unpaid after the sheriff's sale. The Court relied on a 2006 case (citation omitted) holding that tax liens arising subsequent to the sale of a tax sales certificate but prior to the commencement of foreclosure proceedings are included within the foreclosure decree and satisfied by the proceeds of the sheriff's sale. In addition, taxes levied subsequent to the date of the certificate constitute a lien that is superior to the lien on the certificate. The Court held that Sarpy County's general tax liens for the second half of 2011 and 2012 were to be paid from the proceeds of the foreclosure sale and that Sarpy County's liens also took priority over Echo Financial's liens.

The full text of the case is available here: https://supremecourt.nebraska.gov/sites/supremecourt.ne.gov/files/coa/opinions/caMay19A-14-261.pdf