As the city of Philadelphia continues to generate negative publicity in the media about its inability to collect upon delinquent taxpayers, it only seems to make sense that it will make a concerted effort to improve upon its tax collection efforts.

One of the areas where the city will probably increase a lot of its focus is in the realm of real estate. There are many properties in Philadelphia where the city has not collected real estate taxes in over a generation. With the real estate market slowly but surely improving, there are a whole slew of real estate investors hoping that the city subjects some of these properties through the tax foreclosure process.

Unlike a mortgage foreclosure, a tax foreclosure in Philadelphia is not governed by the Pennsylvania Rules of Civil Procedure. Rather, the city is required to strictly follow the regime created by Pennsylvania’s Municipal Claims and Tax Lien Act, 53 P.S. § 7101, et seq., prior to selling a tax delinquent property at a sheriff’s sale.

In City of Philadelphia v. Schaffer, 974 A.2d 509 (2009), the Commonwealth Court of Pennsylvania characterized the “mandatory procedural requirements,” as set forth under the act, as “enacted by the General Assembly as a safeguard to ensure that a city has taken all of the appropriate steps prior to depriving a person of his/her right to real property.”

Under the act, the city initiates the tax foreclosure process by filing a petition in the Court of Common Pleas seeking a decree from the trial court to permit the city to list the property at a sheriff’s sale. Upon receiving the petition, the trial court issues a rule returnable, whereby the property owner is asked by the trial court as to why the petition should not be granted.

The city is then obligated under the act to serve the property owner with the petition by posting the petition and the rule returnable upon the most public part of the property and by sending the petition and the rule returnable to the property owner via certified and regular mail.

As a matter of practice, the city, through its law department, mails the petition and rule returnable to the property owner while the sheriff of Philadelphia County posts the petition and rule returnable upon the property.

After service is effectuated, under the act, the city is then obligated to file affidavits of service with the trial court averring that service has so been made. Again, as a matter of practice, the city, through its law department, files the affidavit of service as to the mailing of the petition and rule returnable while the sheriff of Philadelphia County files the affidavit of service as to the posting of the petition and rule returnable.

Only after all of the affidavits of services have been filed should the trial court schedule the petition for a hearing upon the merits.

On many occasions, the property owner fails to file a written response to the petition and a hearing is scheduled without the property owner’s involvement.

The act specifically conditions the issuance of the decree scheduling the tax foreclosure sale upon the filing of the affidavits of service beforehand. This is a part of the process where I have personally witnessed the city and the trial court running afoul of the tenets of the act.

At the hearing, the city should present evidence establishing how the city complied with the notice requirements under the act. Many times, the city simply introduces the affidavits of service that were filed with the trial court into evidence as establishing its statutory compliance. More should be required of the city. At the very least, the city should be directed to provide the trial court with the signed “green card” acknowledging receipt by the property owner of the petition and rule returnable via certified mail, as well as a certificate of mailing from the U.S. Postal Service evidencing that the petition and rule returnable were mailed to the property owner as well.

As for the posting requirement, many times the affidavit of service is too vague to establish when and where the petition and rule returnable were posted. The trial court should scrutinize if services were properly made and not take the affidavit of service at face value.

After the decree has been issued by the trial court, the city is then obligated under the act to serve the decree upon the property owner via certified and regular mail prior to the sheriff’s sale taking place. Additionally, the city must then file an affidavit of service with the trial court, prior to the sheriff’s sale taking place, averring that service was so made.

Under the act, the sheriff’s sale should not take place unless and until the decree is served upon the property owner and the city files an affidavit of service with the trial court. This is another part of the tax foreclosure process where the city and the sheriff of Philadelphia County seem to run afoul of the act. The sheriff of Philadelphia County should not allow a property to be subjected to a sheriff’s sale unless and until it receives the already-filed affidavit of service evidencing that the decree was served upon the property owner by the city.

If the city runs afoul of the act, the property owner has three months from the date the sheriff’s deed is acknowledged to challenge the legality of the sheriff’s sale by way of the filing of a petition to set aside the sheriff’s sale.

Furthermore, even if the city followed the strict mandates of the act, the property owner still has a right to redeem the property if it is the property owner’s primary residence. The property owner must file a petition with the trial court exercising the property owner’s right of redemption within nine months from the acknowledgement of the sheriff’s deed.

In all, while the city may become more vigilant in collecting its unpaid real estate taxes, it must do so within the mandatory procedural requirements of the act. If the city fails to strictly adhere to the act, there will be plenty of litigation in this area of the law for years to come. •

Alan Nochumson is the sole shareholder of Nochumson P.C., where his law firm’s primary practice areas consist of real estate, litigation, employment and labor, and land use and zoning. He is also president of Bear Abstract Services, where his title insurance company offers comprehensive title insurance, title examination, and closing services. He can be reached at 215-399-1346 or by email at alan.nochumson@nochumson.com.