Pennsylvania Real Estate Tax Law Article/Harper J. Dimmerman, Esq./Philadelphia Lawyer

Pennsylvania Supreme Court Redefines “Proof of Mailing” Under Real Estate Tax Lien Law

ALM. 2014. THIS ARTICLE MAY NOT BE DUPLICATED.

On December 16, 2013, the Pennsylvania Supreme Court handed down a decision that will assuredly have an impact on a property owner’s decision to challenge an upset tax sale, based on an alleged violation of the notice provisions contained within the Real Estate Tax Sale Law. In Horton v. Washington County Tax Claim Bureau and E.D. Lewis (Supreme Court of Pennsylvania for the Western District, No. 33 WAP 2012) our state’s highest court scrutinized the meaning of the phrase “proof of mailing” and reached an important conclusion for any stakeholder in a tax sale.

The subject property is a condominium located in Washington County. The Condominium was purchased by the Horton’s in 2006 which they utilized for business purposes. The owners apparently made no real estate tax payments for the years 2007 and 2008. As required by the strict statutory scheme the notices included providing three (3) separate methods of notice (two notices per certified mail, publication, and posting the premises.) The Washington County Tax Claim Bureau (Bureau) submitted a United States Postal Service (USPS) consolidated postage statement with an attachment explaining to whom mailings had been sent along with the actual envelopes sent to the Horton’s, both of which were returned with notations that stated they were: undeliverable as addressed, the parties not unknown and an inability to forward — with USPS’s official stamp affixed to the envelopes. The Bureau had checked various sources including the Prothonotary, County Tax Assessment Office, the Treasurer’s Office, 2007 Lien Docket, Register of Wills, voter registration records and several internet searches. Notably, the deed for the subject property contained errors with respect to the Mr. Horton’s first name, Ms. Horton’s middle initial and the mailing address. On September 23, 2009, subsequent to the efforts made by the Bureau to notify the owners of the impending sale, E. D. Lewis (buyer) purchased the unit at the tax sale without competitive bidding.

After the sale, the buyer proceeded to quiet title to the property, necessitating significant efforts to track down the prior owners. With the aid of counsel, searches were conducted that included the USPS, utility company records, and various internet based searches. The buyer himself, on the orders of counsel, canvassed the neighborhood around the subject property. That extraordinary effort proved fruitful when a business address was obtained, permitting service of the Quiet Title action.

Less than one (1) month after service of that suit, the Horton’s (hereinafter prior owners) filed a Petition to Open and/or set aside the tax upset sale. The trial court held a hearing, including testimony from the Bureau concerning its procedures pre and post-sale notice efforts and the prior owners testifying to lack of notice. It was alleged was that the Bureau failed to make reasonable investigative efforts to locate the Horton’s and also failed to properly place contemporaneous notations on the Bureau’s internal files to document its investigative efforts. The lower court granted the prior owners’ Petition to set aside the sale, declaring the sale to be null and void and concluding that the Bureau had not satisfied the “proof of mailing” requirement of section 602(e) with respect to the second certified mail because it failed to include a USPS Certificate of Mailing Form 3817 in its filings. The trial court cited In Re: York County Tax Claim Bureau, 3 A.3d 765 (Pa.Cmwlth. 2010) in support of its holding. Subsection 602(e)(2) provides, in relevant part, as follows: “If return receipt is not received from each owner [in response to the certified mail notice required under subsection 602(e)(1), supra], then, at least ten (10) days before the date of the sale, similar notice of the sale shall be given to each owner who failed to acknowledge the first notice by United States first class mail, proof of mailing, [emphasis added] at his last known post office address . . .” In sum the trial court determined that the “proof of mailing” requirement contained within section 602(e)(2) may only be satisfied by utilizing the aforementioned USPS Certificate of Mailing. The Commonwealth Court affirmed on that basis as well, acknowledging that the Bureau’s failure to obtain and file a Certificate of Mailing is statutorily mandated.

Upon review, our highest Court noted that neither party had raised the USPS Certificate of Mailing issue which is the basis of the appeal and the only issue decided by the Court. The Pennsylvania Supreme Court examined the phrase “proof of mailing” as a pure question of law subject to a de novo plenary review. The Horton Court concentrated on Section 602 of the Tax Law, which requires the mailing of a second notice if a return receipt is not received from each owner in response to the first, certified mail notice. As a matter of statutory construction, the highest court took issue with the Commonwealth Court’s interpretation, namely that the “proof of mailing” requirement may only be satisfied with a the proffer of USPS Certificate of Mailing.

The crux of the Court’s reasoning is that “proof of mailing” is a statutory definition—there is no USPS document entitled “proof of mailing.” A USPS Certificate of Mailing is a document that purports to show that a letter was mailed by a party to another party, on a specific date to a specific address. According to the Pennsylvania Supreme Court, it is critical the legislature did not use the term “certificate of mailing” but rather used the term “proof of mailing” which is not a USPS term but a statutory term.

In short, such a narrow view does not reflect the intention of the legislature, as to what is required of the taxing authority, based upon a plain reading of the statute. It was determined that the other USPS documents proffered by the Bureau to show compliance with the statutory notice requirements were deemed sufficient.

The dissenting opinion characterized the Tax Sale Act as creating a unified procedure with extremely detailed and specific instructions to show “proof of mailing.” The dissent reviewed the USPS Domestic Mail Manual contained in 39 C.F.R. Section 111.1 for guidance. The dissent concluded that the USPS provided forms available only at the time envelopes are presented to the USPS for mailing. These forms are designed to provide evidence that an item was presented for mailing. Specifically, in theHorton case, the only appropriate document to prove “proof of mailing” would have been the very item that the Bureau failed to provide–the Certificate of Mailing Form 3817. This form is viewed as part of the uniform scheme of “proof of mailing” that the General Assembly intended. The dissent viewed the majority as opening the door for placing judges in the position of determining credibility and weight of evidence that would not be necessary if the Court would have affirmed the trial and Commonwealth Courts strict reading of the statute.

Time will tell how the credibility and weight issues will be examined. But certainly a petitioner who wishes raise a of “proof of mailing” issue when a client has lost a property under similar circumstances as presented in Horton may face a more difficult challenge in having the sale voided .

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Harper J. Dimmerman is an Adjunct Professor at Temple University’s Fox School of Business. His office represents clients in various litigation and real estate law matters and he may be reached via e-email at hdimmerman@llfnow.com or telephone 215-545-0600.

James M. Lammendola is an Assistant Professor at Temple University’s Fox School of Business who was in private practice for twenty years. He may be reached via e-mail at james.lammendola@temple.edu or telephone 215-204-4124.