In re Sale No. 10

• Decision Date: 02 July 2002
• Citation: 801 A.2d 1280
• Parties: In re Free and Clear Sale Conducted November 19, 1998 SALE NO. 10, Deed No. 23198. Richard Popkin, Appellant.
• Court: Pennsylvania Commonwealth Court

801 A.2d 1280

In re Free and Clear Sale Conducted November 19, , Deed No. 23198.

Richard Popkin, Appellant.

Commonwealth Court of Pennsylvania.

Argued April 10, 2002.

Decided July 2, 2002.

Lewis W. Wetzel, Wilkes-Barre, for appellant.

Christopher B. Slusser, Sugarloaf, for appellee.

BEFORE: SMITH-RIBNER, Judge, and LEAVITT, and Judge FLAHERTY, Senior Judge.

OPINION BY Senior Judge FLAHERTY.

Richard Popkin (Lienholder) appeals from a decision of the Court of Common Pleas of Luzerne County (trial court) which denied his Motion to Void the Judicial Tax Sale¹ of a piece of property on which he holds a lien. We vacate the order of the trial court and remand this case for the purpose set forth below.

On August 5, 1997 an Upset Tax Sale was conducted by the Luzerne County Tax Claims Bureau (Tax Bureau) on a piece of property owned by Fli-Lang Realty, Inc. for past due real estate taxes.² Because the upset price was not bid, the Tax Bureau petitioned the trial court for permission to conduct a Judicial Tax Sale. The trial court granted the petition and, in accordance with Section 611 of the Pennsylvania Real Estate Tax Sale Law (Tax Sale Law),³ the Tax Bureau attempted to notify Lienholder by certified mail. However, the Tax Bureau was unsuccessful because the mail was returned as unclaimed. Therefore, the Judicial Tax Sale was conducted on November 19, 1998 and the property was sold to Alfred J. Bonk, Jr. (Appellee) for $8,300.00. On December 20, 2000, Lienholder filed a Motion to Void Tax Sale with the trial court asserting that he has a $517,465.00 lien on the property. In addition to administrative fees and expenses, Lienholder asserted that he is owed a total of $707,482.00. Lienholder also asserted that he has commenced a proceeding to revive and continue the lien. Lienholder alleges that he was not served with proper notice of the tax sale and that, for this reason, he is entitled to have his lien revived. The Tax Bureau and Appellee filed Answers asserting that the sale was conducted in accordance with the Tax Sale Law.

At the hearing, Lienholder, Appellee and the Tax Bureau testified and presented evidence. Mary Augello, who is the Executive Director of the Tax Bureau, testified that the Luzerne County Sheriff's office attempted to notify Lienholder at his last known address about the Judicial Tax Sale on three occasions by certified mail, but that the mail was returned as unclaimed (N.T. 5/21/01, p. 6). Lienholder testified that he hasn't lived at the address to which the Sheriff's office sent the mail since 1992. Lienholder's attorney stated that he knew where Lienholder was and could have contacted him. However, he did not find out about the Judicial Tax Sale until six or eight months after it occurred. On cross-examination, Ms. Augello also testified that a judgment filed with the Tax Bureau listed Lienholder's attorney. However, the Tax Bureau did not contact Lienholder's attorney because, as Ms. Augello stated, "It's not required by law that we notify the lawyers." (N.T. 5/21/2001, p. 11). Appellees also testified, stating that they have made over $41,000.00 worth of improvements on the property since they bought it at the Judicial Tax Sale.

The trial court denied Lienholder's Motion, and Lienholder appealed to this Court. Thereafter, in accordance with Pa. R.A.P.1925(a), the trial court issued an opinion in support of its decision. The trial court explained that Lienholder contended that the more stringent notice requirements of Section 607a, which is located in the Upset Tax Sale section, should be applied to this case. However, the trial court found that because a Judicial Tax Sale took place in accordance with Sections 610-612 and because the notice provisions relating to Judicial Tax Sales were followed by the Tax Bureau, the sale of the property was conducted properly. In support of its decision, the trial court cited our decision in In Re Serfass, 651 A.2d 677 (Pa.Cmwlth.1994). Accordingly, the trial court denied Lienholder's Motion.

"Our scope of review in tax sale cases is limited to a determination of whether the trial court abused its discretion, rendered a decision which lacked supporting evidence, or clearly erred as a matter of law." In re Serfass, 651 A.2d at 678.

When a property owner is delinquent in paying taxes, an Upset Tax Sale is conducted pursuant to Sections 601-609 Tax Sale Law. An Upset Tax Sale, which is explained below, falls within the general definition of a "tax sale," which is any sale at which a property is sold because the owner is delinquent in paying taxes. Before the Upset Tax Sale is conducted, notice must be published in a newspaper and "shall be addressed to the `owners of properties described in this notice and to all persons having liens, judgments or municipal or other claims against such properties.'" Section 602(d). Additionally, the owner must be notified by certified mail. Section 602(2). The lienholder(s), if any, are not required to be notified by mail of an Upset Tax Sale because a person who buys a property at an Upset Tax Sale takes the property "subject to the lien of every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in the upset price ...". Section 609 (emphasis added). Section 607a, which is located in the Upset Tax Sale section of the Tax Sale Law and which was added by the Legislature in 1986, also provides additional notification requirements.⁴ Most notable is the requirement that the tax bureau use "reasonable efforts" to discover persons whose property interests are likely to be affected by an impeding "tax sale:"

(a) When any notification of a pending tax sale or a tax sale subject to court confirmation is required to be mailed to any owner, mortgagee, lienholder or other person or entity whose property interests are likely to be significantly affected by such tax sale, and such mailed notification is either returned without the required receipted personal signature of the addressee or under other circumstances raising a significant doubt as to the actual receipt of such notification by the named addressee or is not returned or acknowledged at all, then, before the tax sale can be conducted or confirmed, the bureau must exercise reasonable efforts to discover the whereabouts of such person or entity and notify him. The bureau's efforts shall include, but not necessarily be restricted to, a search of current telephone directories for the county and of the dockets and indices of the county tax assessment offices, recorder of deeds office and prothonotary's office, as well as contacts made to any apparent alternate address or telephone number which may have been written on or in the file pertinent to such property. When such reasonable efforts have been exhausted, regardless of whether or not the notification efforts have been successful, a notation shall be placed in the property file describing the efforts made and the results thereof, and the property may be rescheduled for sale or the sale may be confirmed as provided in this act.

(b) The notification efforts required by subsection (a) shall be in addition to any other notice requirements imposed by this act.

72 P.S. § 5860.607a (a) and (b) (emphasis added). If the upset price is not bid at the Upset Tax Sale, only then may a Judicial Tax Sale be conducted pursuant to Sections 610-612 of the Tax Sale Law.⁵ In fact, a Judicial Tax Sale is never performed first because an attempt at an Upset Tax Sale is a prerequisite to a Judicial Tax Sale. This latter sale is called a Judicial Tax Sale because the tax bureau must petition the trial court for permission to sell the property "free can clear" of all liens. Section 610. See also Murphy v. Monroe County Tax Claim Bureau, 784 A.2d 878, 881 (Pa.Cmwlth.2001). Thus, although Upset Tax Sales and Judicial Tax Sales are distinct, both are "tax sales" because they each involve the sale of property for delinquent taxes.

The notification provisions for a Judicial Tax Sale, however, are different from those for an Upset Tax Sale and are set forth in Sections 610 and 611 of the Tax Sale Law:

§ 5860.610. Petition for judicial sale

In cases where the upset price shall not be bid at any such sale, the sale shall be continued ... the court shall grant a rule upon all parties thus shown to be interested to appear and show cause why a decree should not be made that said property be sold, freed and cleared of their respective tax and municipal claims, liens, mortgages, charges and estates, except separately taxed ground rents.

§ 5860.611. Service of rule

Service of the rule shall be made in the same manner as writs of scire facias are served in this Commonwealth. When service cannot be made in the county where the rule was granted, the sheriff of the county shall deputize the sheriff of any other county in this Commonwealth, where service can be made. If service of the rule cannot be made in this Commonwealth, then the rule shall be served on the person named in the rule by the sheriff, by sending him, by registered mail, return receipt requested, postage prepaid, at least fifteen (15) days before the return day of the rule, a true and attested copy thereof, addressed to such person's last known post office address. The sheriff shall attach to his return, the return receipts, and if the person named in the rule has refused to accept the registered mail or cannot be found at his last known address, shall attach evidence thereof. This shall constitute sufficient service under this act.⁶

72 P.S. §§ 5860.610 and 5860.611 (emphasis added).

Unlike an Upset Tax Sale, which is only preliminary to a Judicial Tax Sale for free and clear purposes, at a Judicial Tax Sale the property is sold "free and clear" of tax and municipal claims, liens, mortgages, etc. See 72 P.S. § 5860.609.

On appeal to this Court, Lienholder argues that the notice provisions in Section 607a of the Tax Sale Law apply...