SALT Blawg – State and Local Tax
State and Local Tax ("SALT") issues require state and local tax knowledge. Chamberlain Hrdlicka's SALT Blawg provides exactly that knowledge with news updates and commentary about state and local tax issues.
You can expect to find relevant information about topics such as income (corporate and personal) tax, franchise tax, sales and use tax, property (real and personal) tax, fuel tax, capital stock tax, bank tax, gross receipts tax and withholding tax. SALT Blawg, offers tax talk for tax pros… in your neighborhood.
Chamberlain Hrdlicka Blawgs
In an unreported opinion, on February 6, 2017, the Commonwealth Court vacated an order of the Philadelphia Court of Common Pleas, which had granted the motion of a Sheriff’s sale purchaser to intervene and to extend time to complete payment of the Sheriff’s sale purchase price. The Commonwealth Court characterized the Purchaser’s motion as a “restart” of the Sheriff’s sale subject to the same detailed notice and hearing procedures as the initial sale.
In City of Philadelphia v. Singhal, No. 128 C.D. 2016, it was undisputed that the City of Philadelphia had properly served notice of the Sheriff’s sale upon the Owner by posting, and by certified mail at the property address and at the Owner’s registered mailing address in Philadelphia. Although the Municipal Claims and Tax Liens Act (“MCTLA”), which governs Sheriff’s sales in the City, requires that an owner register a notice of interest in the property with the City and update the mailing address shown on the notice (53 P.S. §7193.1), the Owner had failed to amend the notice to show that she was living in Maryland. As a result, the Owner was supposedly unaware that the property had been sold at Sheriff’s sale.
The Purchaser at the Sheriff’s sale had paid a down payment for the property, but had failed to pay the remaining amount within 30 days, causing the Sheriff to file a writ of return for the Purchaser’s failure to comply with the sale terms.
Meanwhile, the Owner had become aware of the Sheriff’s sale, had paid the remaining delinquent taxes, and had rented the property to a third-party tenant.
Thereafter, the Purchaser filed a motion to intervene and requested permission from the Court of Common Pleas to complete the terms of the sale. The court ordered the Purchaser to serve a notice of hearing on all interested parties, which included the Owner. Knowing that the Owner did not reside at the property, the Purchaser sent notice to the Owner only at the property, failing to send it to the Owner’s out-of-date registered address in Philadelphia. A hearing was held without the Owner, and the Purchaser’s motion was granted, allowing him to pay the balance of the purchase price. The Commonwealth Court noted that the lower court’s order had stated that there was “[n]o objection by the City,” which was troubling in light of the fact that the Owner had paid all of the taxes due before the hearing.
Eleven months later, the Owner filed a motion to vacate the order. The court denied the Owner’s motion without a hearing as “untimely and procedurally improper” under 53 P.S. § 7193.3, which requires any petition to set aside a Sheriff’s sale to be filed within three months after the acknowledgement of the Sheriff’s sale deed.
On review of that denial, the Commonwealth Court characterized the Purchaser’s motion as a “restart” of the Sheriff’s sale not expressly provided for in the MCTLA. In other words, the sale of the property had “included some improvisational aspects” beyond the relevant provisions of the governing law. The Court, however, reasoned that at least some of the requirements set forth in the MCTLA relating to a Sheriff’s sale in the first instance -- particularly, the requirements of notice to the Owner by mailing of a rule to show cause, and an inquiry by the trial court into whether the facts underlying the petition for sale are true -- are likewise applicable to a “restart” sale.
Therefore, the Purchaser was required to serve notice of his motion, just as the City had done with respect to the initial Sheriff’s sale, upon the Owner at her registered address in Philadelphia. This was despite the fact, as acknowledged by the Court, that the Owner would not have actually received the notice because she was living in Maryland. Nevertheless, the Purchaser had failed to comply with the statutory notice requirements.
Because there was no legal authority to make the sale, the grant of an equitable remedy, such as the grant of the Owner's untimely motion to set aside a Sheriff’s sale, was permissible. Thus, according to the Commonwealth Court, the lower court had abused its discretion by summarily denying the motion, and thereby failing to inquire into whether the notice of motion was properly served and whether the delinquent property taxes were still outstanding.
While the Commonwealth Court highlighted what the Purchaser had done wrong in this case, it was not explicit about what the proper procedure would be for such a “restart” sale in the future. For instance, the Court said nothing about the whether the Purchaser was required to post his motion and notice at the property, which is a requirement applicable to the notice of any initial Sheriff’s sale, and which was apparently not done in this case. Whatever the proper procedure is, it requires, at minimum, a mailed notice to the registered address of the property owner, and an inquiry by the trial court as to whether the factual predicate for the sale (i.e., a tax delinquency) still exists.
The Commonwealth Court opinion is available here