Tax Sales 101

Winnie Branton and John Kromer

Housing Alliance Monthly Land Bank Leader and Blight SeriesApril 16, 2015

Land Bank Powers

Land banks may acquire privately-owned, tax delinquent properties at tax sales.

68 Pa.C.S.A. § 2117(c)-(e).Photo credit: www.wkrg.com

Delinquent Property Tax Enforcement

Pennsylvania has several statutes governing tax collection and enforcement.

Most of PA governed by:

Real Estate Tax Sale Law (RETSL) - governs in most of PA

Municipal Claim and Tax Lien Law (MCTLL) – Philadelphia and Allegheny County, plus opt in

Tax Sale Process

1. Upset Sale

2. Private Sale

3. Judicial Sale

4. Repository List of Unsold Properties

Upset Sale

Public sale to the highest bidder

Minimum bid (or upset price) = tax liens plus costs of sale

Purchaser at upset sale takes the property subject to all other liens and claims against the property – NO CLEAR TITLE

Private Sale

After a property has been exposed but not sold at an Upset Sale (under RETSL)

Purchaser through a private sale takes the property subject to all other liens and claims against the property – NO CLEAR TITLE

Written bid subject to approval by all taxing districts; advertising and notice requirements

Judicial Sale

Initiated by court petition

Following notice to all interested parties, Court issues order directing the sale of the properties “free and clear” of all tax liens and municipal claims, private liens and mortgages, and other charges

Public sale to the highest bidder

Minimum bid = costs

Repository List of Unsold Properties

Properties not sold are maintained on the repository list

May be sold without notice

Subject to approval by all taxing districts

Acquisition at Upset Sale

How can a land bank acquire property at an upset sale?

Prior agreement to buy if NO bid higher than minimum; or

Offer highest bid

Acquisition at Judicial Tax Sale

How can a land bank acquire property at a judicial tax sale?

By negotiated agreement with tax claim bureau or other plaintiff/tax-foreclosing body

For negotiated sum or other consideration No competitive bidding Land bank takes property with “free and clear” title

Redemption and Challenges

No post-sale redemption rights under RETSL

Under MCTLL,

for occupied properties, 9-month post-sale redemption for vacant properties, no post-sale redemption

Post-sale legal challenges based on failure to follow notice requirements; constitutional due process requirements