Owner Permitted to Redeem Property from Tax Claim Bureau

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A panel of the Commonwealth Court held that the Westmoreland Tax Claim Bureau had the discretion under the Real Estate Tax Sale Law (RETSL) to allow an owner of a tax delinquent property (Rowe) to redeem the property through the payment of all tax and costs after the property failed to sell at a tax sale and a judicial sale and had been placed in the bureau’s repository of unsold property. Consequently, the court dismissed a complaint for mandamus and declaratory judgment filed by an individual (Sanders) seeking to force the bureau to accept his bid for the property. Sanders et al. v. Westmoreland County Tax Claim Bureau et al., No. 1910 C.D. 2013 (Pa. Cmwlth. Apr. 22, 2014).

Rowe was the record owner of the tax delinquent property. The property was subjected to both an upset sale and a judicial sale under the RETSL; no bids were received at either sale. The property was then placed in the bureau’s repository of unsold property; title property passed to the bureau by operation of law. Sanders placed a bid of $7,225 for the property with the bureau and submitted the purchase price and a recording fee. The bureau thereafter advised Sanders that his request to purchase the property was denied, as Rowe had paid in full the $21,000 of taxes and costs due on the property, and returned Sanders’ check for the purchase price and recording fee.

Sanders sought mandamus and declaratory judgment relief, arguing that upon submission of the bid and purchase price to the bureau, he had a binding purchase agreement for the property that required the property to be transferred to him, that the bureau could not allow the property to be “repurchased” by Rowe under Section 618(a) of the RETSL and that Rowe had lost any right of redemption following the upset sale. The trial court disagreed with Sanders and the Commonwealth Court upheld the trial court’s decision.

The Commonwealth Court relied on the clear language of the RETSL, and the well-established rule of law that “[t]he decision to accept any compromise of delinquent taxes … is wholly within the discretion of the taxing authorities.” Mehalic v. Westmoreland Cnty. Tax Claim Bureau, 534 A.2d 157, 159 (Pa. Cmwlth. 1987). Pursuant to Section 627(a) of the RETSL, once the property was placed in the repository, the bureau “may, with the written consent of all the taxing districts where the property is located, accept an offer of any price … without court approval and published notice of sale.” 72 P.S. 5860.627(a) (emphasis added). Thus, the court held that the bureau had the discretion to decide what to do with the property – either allow Rowe to redeem the property by paying the $21,000 of taxes and costs owed or move forward with seeking the consent of the taxing authorities to accept Sanders bid of $7,225 for the property. As the court pointed out, it was in the interest of the bureau, the taxing authorities and the taxpayers to accept Rowe’s full payment of taxes and fees, which far outweighed Sanders’s bid. The court found that the bureau was not required to sell the property to Sanders and that no binding purchase agreement was in place, as the taxing authorities had never authorized the sale to Sanders as required under Section 627(a). Further, although not essential to its final decision, the court noted in several footnotes that the payment of the $21,000 by Rowe was a redemption, not a repurchase of the property prohibited by Section 618(a) of the RETSL, and that the redemption was permissible as there had been no actual sale of the property as a result of the upset sale.

 

 

Topics:  Declaratory Judgments, Delinquency Status, Foreclosure, Property Tax, Writ of Mandamus

Published In: Civil Procedure Updates, General Business Updates, Residential Real Estate Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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