James Lammendola ()

As municipalities across the ­state attempt to utilize various methods of raising much-needed revenue, it is noteworthy that the Commonwealth Court has reaffirmed the ­vitality of our statutory scheme that regulates the process of real estate tax sales.

For the second time since July 2016, the Commonwealth Court has taken a municipal tax bureau to task for not following the ­requirements of the Real Estate Tax Sale Law at 72 P.S. Section 5860.603. In Sampson v. Tax Claim Bureau of Chester County and CJD Group, (Dec. 12, No. 355 C.D. 2016), the court reversed an order of the Chester County Court of Common Pleas that denied a petition to set aside an upset tax sale. Anyone involved in attempting to stay a real estate tax sale so that the taxpayer can, over time, bring the payments current should be versed in the elements of the statute and the holding of this case and others that will be discussed. The facts giving rise to Sampson are relatively straightforward.

On Sept. 6, 2013, David and Linda Sampson tendered a $4,500 payment on their 2011 delinquent real estate property taxes to stay an imminent September 2013, upset tax sale. The Commonwealth Court credited Linda Sampson’s testimony that she was only presented with, what was termed by the Tax Claim Bureau, as a “continued installment agreement” under Section 601 of the Real Estate Tax Sale Law at the time she tendered the down payment. The agreement required that the $1.236.87 balance owing and due for 2011 was to be paid no later than Dec. 6, 2013, despite Sampson’s assertion that the she could not pay the balance until the end of December 2013. The Dec. 6 payment was not made. Without further notice to the Sampsons, the property was sold to CJD Group at the Dec. 9, 2013, tax sale. When the Sampsons attempted to pay the balance, they discovered the sale had taken place and commenced legal proceedings to set aside the sale. The Sampsons unsuccessfully ­argued that the sale was invalid because they were not offered an ­installment ­payment agreement under Section 603 which requires notice of a default. The trial court held the Tax Claim Bureau had the authority to enter into any type of ­payment plan.

Section 603 enumerates elements that require strict compliance by county real estate tax collectors when a 25 percent down payment on all tax claims or judgments (including interest and costs) are paid. First, a written agreement must be offered to the taxpayer whereby the taxpayer is offered an ­opportunity to pay the balance in not more than three installments within one year of the agreement, with the installment dates and amounts specified. Secondly, if the taxpayer defaults on the agreement, written notice must be given to the taxpayer that the property will be subject to an upset sale not earlier than 90 days after a default.

The Commonwealth Court concluded that an examination of the reproduced ­record made it evident that an installment plan—with a one-year window to pay the balance—was not offered to the Sampsons at the time they paid in excess of 25 ­percent of their real estate tax delinquency. When the Sampsons paid 25 percent down, it triggered the ­application of Section 603.

The court held that when a taxpayer makes a payment of 25 percent or more, the tax claim bureau must advise the taxpayer of the Section 603 option because failure to do so is a due process violation, citing In Re Consolidated Return of the Tax Claim Bureau of the County of Beaver from the Aug. 16, 2011, upset sale for delinquent taxes, 105 A.3d 76, 82 (Pa. Cmwlth. 2014), petition for ­allowance of appeal denied, 121 A.3d 497 (Pa. 2015). The burden in not on the taxpayer to ­request the Section 603 option—the burden is on the tax claim bureau to advise the taxpayer of the availability of the 603 option. Consequently, the finding that the Sampsons were not notified of the 603 option invalidated the upset sale. Section 601 does not contain provisions that are ­designed to deprive taxpayers of the protections of 603. The court made it clear that there is no authority for the taxpayer to be offered only a Section 601 agreement when the taxpayer makes a down payment of at least 25 percent. And once the taxpayer has a property removed from sale under Section 603, the sale is subject to the notice of default provisions of Section 603.

The Tax Claim Bureau contended that the agreement accepted by the Sampsons was not subject to the Section 603 because the continuation installment agreement is authorized by Section 601 of the Real Estate Tax Sale Law. Section 601 allows a sale to be continued but does not require a notice of default if a property re-listed by the end of a calendar year.

The same panel that decided Sampson rejected the same Section 601 defense that the Chester County Tax Bureau posited in Barker v. Chester County Tax Claim Bureau & CJD Group, 143 A.3d 1069 (Pa. Cmwlth. 2016). The facts in Barker were different—multiple properties were involved, two payment agreements were made and the amounts owed were larger but the core issue was the same: were the Barkers entitled to be offered a Section 603 agreement? Just as in Sampson, on Sept. 6, 2013, the Barkers were offered an installment agreement under Section 601, despite paying 25 percent of their outstanding balance on their 2011 delinquency, and given until Dec. 6 to pay the balance. When they did not pay the balance by Dec. 6, the property was sold on Dec. 9 and their subsequent petition to set aside the sale was denied by the trial court.

The Tax Claim Bureau defended ­stating the Barkers were not entitled to a 603 agreement because they had defaulted on a previous 603 Agreement made in 2010. A taxpayer does not qualify for a Section 603 agreement if a Section 603 agreement was entered into and breached within the ­previous three years. But the Commonwealth Court determined that the 2010 agreement was not breached because the Barkers paid all amounts owing and due within a year—despite missing an ­installment payment. Consequently, the Barkers were granted relief because the Tax Claim Bureau could not lawfully sell their two properties at the aforementioned December sale because the Barkers met the requirements of Section 603 when they tendered 25 percent of the outstanding balance of the two subject properties in September 2103.

The Commonwealth Court’s analysis should not be perceived solely as a ­narrow interpretation of the statute. Before interpreting Section 603 in both Sampson and Barker, the court reminds us not only that due process is implicated in any taking of property for the collection of taxes but also that the Real Estate Tax Sale Law is not” intended to deprive citizens of their property or to create investment opportunities for others,” citing Stanford-Gale v. Tax Claim Bureau of Susquehanna County, 816 A.2d 1214, 1216 (Pa. Cmwlth. 2003). The court noted in Smith v. Tax Claim Bureau of Pike County, 834 A.2d 1247, 1251 (Pa. Cmwlth. 2003), that in real estate tax collection cases “the focus is not on the neglect of the owner … but on whether the activities of the bureau comply with the requirements of the statute.”

While it is some comfort that due ­process is so clearly taken seriously in these two recent cases, counsel should still be ­proactive. At a minimum, when 25 percent can be placed as a down payment—ask for a Section 603 agreement—don’t wait to be offered one. If your client cannot make good on an ­installment payment—check the upcoming tax sale dates to make ­certain the property is not 
listed for sale. •

As municipalities across the ­state attempt to utilize various methods of raising much-needed revenue, it is noteworthy that the Commonwealth Court has reaffirmed the ­vitality of our statutory scheme that regulates the process of real estate tax sales.

For the second time since July 2016, the Commonwealth Court has taken a municipal tax bureau to task for not following the ­requirements of the Real Estate Tax Sale Law at 72 P.S. Section 5860.603. In Sampson v. Tax Claim Bureau of Chester County and CJD Group, (Dec. 12, No. 355 C.D. 2016), the court reversed an order of the Chester County Court of Common Pleas that denied a petition to set aside an upset tax sale. Anyone involved in attempting to stay a real estate tax sale so that the taxpayer can, over time, bring the payments current should be versed in the elements of the statute and the holding of this case and others that will be discussed. The facts giving rise to Sampson are relatively straightforward.

On Sept. 6, 2013, David and Linda Sampson tendered a $4,500 payment on their 2011 delinquent real estate property taxes to stay an imminent September 2013, upset tax sale. The Commonwealth Court credited Linda Sampson’s testimony that she was only presented with, what was termed by the Tax Claim Bureau, as a “continued installment agreement” under Section 601 of the Real Estate Tax Sale Law at the time she tendered the down payment. The agreement required that the $1.236.87 balance owing and due for 2011 was to be paid no later than Dec. 6, 2013, despite Sampson’s assertion that the she could not pay the balance until the end of December 2013. The Dec. 6 payment was not made. Without further notice to the Sampsons, the property was sold to CJD Group at the Dec. 9, 2013, tax sale. When the Sampsons attempted to pay the balance, they discovered the sale had taken place and commenced legal proceedings to set aside the sale. The Sampsons unsuccessfully ­argued that the sale was invalid because they were not offered an ­installment ­payment agreement under Section 603 which requires notice of a default. The trial court held the Tax Claim Bureau had the authority to enter into any type of ­payment plan.

Section 603 enumerates elements that require strict compliance by county real estate tax collectors when a 25 percent down payment on all tax claims or judgments (including interest and costs) are paid. First, a written agreement must be offered to the taxpayer whereby the taxpayer is offered an ­opportunity to pay the balance in not more than three installments within one year of the agreement, with the installment dates and amounts specified. Secondly, if the taxpayer defaults on the agreement, written notice must be given to the taxpayer that the property will be subject to an upset sale not earlier than 90 days after a default.

The Commonwealth Court concluded that an examination of the reproduced ­record made it evident that an installment plan—with a one-year window to pay the balance—was not offered to the Sampsons at the time they paid in excess of 25 ­percent of their real estate tax delinquency. When the Sampsons paid 25 percent down, it triggered the ­application of Section 603.

The court held that when a taxpayer makes a payment of 25 percent or more, the tax claim bureau must advise the taxpayer of the Section 603 option because failure to do so is a due process violation, citing In Re Consolidated Return of the Tax Claim Bureau of the County of Beaver from the Aug. 16, 2011, upset sale for delinquent taxes, 105 A.3d 76, 82 (Pa. Cmwlth. 2014), petition for ­allowance of appeal denied, 121 A.3d 497 (Pa. 2015). The burden in not on the taxpayer to ­request the Section 603 option—the burden is on the tax claim bureau to advise the taxpayer of the availability of the 603 option. Consequently, the finding that the Sampsons were not notified of the 603 option invalidated the upset sale. Section 601 does not contain provisions that are ­designed to deprive taxpayers of the protections of 603. The court made it clear that there is no authority for the taxpayer to be offered only a Section 601 agreement when the taxpayer makes a down payment of at least 25 percent. And once the taxpayer has a property removed from sale under Section 603, the sale is subject to the notice of default provisions of Section 603.

The Tax Claim Bureau contended that the agreement accepted by the Sampsons was not subject to the Section 603 because the continuation installment agreement is authorized by Section 601 of the Real Estate Tax Sale Law. Section 601 allows a sale to be continued but does not require a notice of default if a property re-listed by the end of a calendar year.

The same panel that decided Sampson rejected the same Section 601 defense that the Chester County Tax Bureau posited in Barker v. Chester County Tax Claim Bureau & CJD Group , 143 A.3d 1069 ( Pa. Cmwlth. 2016 ) . The facts in Barker were different—multiple properties were involved, two payment agreements were made and the amounts owed were larger but the core issue was the same: were the Barkers entitled to be offered a Section 603 agreement? Just as in Sampson, on Sept. 6, 2013, the Barkers were offered an installment agreement under Section 601, despite paying 25 percent of their outstanding balance on their 2011 delinquency, and given until Dec. 6 to pay the balance. When they did not pay the balance by Dec. 6, the property was sold on Dec. 9 and their subsequent petition to set aside the sale was denied by the trial court.

The Tax Claim Bureau defended ­stating the Barkers were not entitled to a 603 agreement because they had defaulted on a previous 603 Agreement made in 2010. A taxpayer does not qualify for a Section 603 agreement if a Section 603 agreement was entered into and breached within the ­previous three years. But the Commonwealth Court determined that the 2010 agreement was not breached because the Barkers paid all amounts owing and due within a year—despite missing an ­installment payment. Consequently, the Barkers were granted relief because the Tax Claim Bureau could not lawfully sell their two properties at the aforementioned December sale because the Barkers met the requirements of Section 603 when they tendered 25 percent of the outstanding balance of the two subject properties in September 2103.

The Commonwealth Court’s analysis should not be perceived solely as a ­narrow interpretation of the statute. Before interpreting Section 603 in both Sampson and Barker , the court reminds us not only that due process is implicated in any taking of property for the collection of taxes but also that the Real Estate Tax Sale Law is not” intended to deprive citizens of their property or to create investment opportunities for others,” citing Stanford-Gale v. Tax Claim Bureau of Susquehanna County , 816 A.2d 1214, 1216 ( Pa. Cmwlth. 2003 ) . The court noted in Smith v. Tax Claim Bureau of Pike County , 834 A.2d 1247, 1251 ( Pa. Cmwlth. 2003 ) , that in real estate tax collection cases “the focus is not on the neglect of the owner … but on whether the activities of the bureau comply with the requirements of the statute.”

While it is some comfort that due ­process is so clearly taken seriously in these two recent cases, counsel should still be ­proactive. At a minimum, when 25 percent can be placed as a down payment—ask for a Section 603 agreement—don’t wait to be offered one. If your client cannot make good on an ­installment payment—check the upcoming tax sale dates to make ­certain the property is not 
listed for sale. •