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HomeMy WebLinkAbout2005-6758 Civil IN RE: PUBLIC UPSET SALE OF : IN THE COURT OF COMMON PLEAS OF PROPERTIES HELD BY THE : CUMBERLAND COUNTY, PENNSYLVANIA CUMBERLAND COUNTY TAX : CLAIM BUREAU ON DECEMBER 8, : 2005 TAX SALE LAW : : (1827 Ritner Highway, Shippensburg, : PA Tax Parcel #30-11-0304-001) : 05-6758 CIVIL TERM IN RE: PETITION TO SET ASIDE TAX SALE OR ORDER SATISFACTION OF MORTGAGE OPINION AND ORDER OF COURT Bayley, J., September 18, 2007:-- Steve L. Nenninger and Susan E. Nenninger were the owners of 1827 Ritner Highway, North Newton Township, Cumberland County, Pennsylvania. They were in default of a May 3, 2005 mortgage on the property for which an action in foreclosure was filed on by the July, 2005 holder of the mortgage, Mortgage Electronic Registration Systems (MERS).1 In , as a result of the Nenningers failure to pay taxes, the Cumberland County Tax Claim Bureau December 7, 2005 notified them that their property would be sold at a tax sale. On , the property was sold in foreclosure to MERS by the Sheriff of Cumberland County. The next day, December 8, 2005 , the property was sold for the upset price at a tax sale to James Halkias.2 December 29, 2005 On , on the petition of the Tax Claim Bureau, this court entered an order February 1, 2006 of confirmation nisi. On , no objections or exceptions having been filed, a __________ 1 The original lender on February 28, 2002, was Conseco Bank, Inc. That mortgage was assigned to Conseco Finance Consumer Discount Company. That company then assigned the mortgage to MERS. The assignment dated October 20, 2005, was recorded on November 3, 2005, in the Office of the Recorder of Deeds of Cumberland County at Miscellaneous Book 689, Page 330. The address of MERS on the assignment is in Flint, Michigan. 05-6758 CIVIL TERM January 30, 2006 final decree of absolute confirmation was entered. On , the Tax February 13, 2006 Claim Bureau executed a deed, which was recorded on , to James Halkias. February 7, 2006 The Sheriff of Cumberland County, by a deed executed on , and February 8, 2006 recorded on , conveyed the property to Household Realty Corporation, the March 20, 2006, assignee from MERS.On for the consideration of $65,000, James Halkias executed and recorded a deedtothe property to Wayne Z. Shirk and Susan S. Shirk. July 12, 2006 On , Household Realty Corporation filed a petition to “set aside and/or strike public tax upset sale of property or alternatively, to order upset tax sale July 13, 2006 purchaser to satisfy mortgage.” On , a Rule was entered upon the Cumberland County Tax Claim Bureau and James P. Halkias to show cause why petitioner was not entitled to the relief requested. A hearing was scheduled for August December 29, 2006 10, 2006, which was continued. On , Household filed an amended petition “to set aside and/or strike public tax upset sale of property or alternatively, to order petitioner to satisfy mortgage.” This petition included Wayne Z. Shirk and Susan S. Shirk as respondents. A hearing was scheduled, which was continued. The hearing July 16, 2007August 23, was conducted on . The issues where briefed and argued on 2007 . STANDING Respondents maintain that Household Realty Corporation does not have standing to seek the relief sought in its amended petition. The Real Estate Tax Sale 2 The bid was for $6,503.96. -2- 05-6758 CIVIL TERM et seq. Law, 72 P.S. Section 5860.101 , at Section 607(g), provides: If no objections or exceptions are filed or if objections or exceptions are finally overruled and the sale confirmed absolutely, the validity of the tax, its return for nonpayment, the entry of the claim, or the proceedings of the bureau the making of such claim absolute and with respect to such sale, shall not thereafter be inquired into judicially in equity or by civil proceedingsby the person in whose name such property was sold, by a grantee or assignee, by any lien creditor or by any other person, except with respect to the giving of notice under the act, to the time of holding the sale, or to the time of petitioning the court for an order of sale. There shall be no period of redemption after such sale and the sale shall be deemed to pass a good and valid title to the purchaser, free from any liens or encumbrances whatsoever, except such liens as are hereafter specifically saved, and in all respects as valid and effective as if acquired by a sheriff’s deed. (Emphasis added.) Household Realty Corporation was not the owner of 1827 Ritner Highway when this court entered an order of confirmation nisi on December 29, 2005. However, by a letter to the Sheriff of Cumberland County dated January 26, 2006, and received by the Sheriff on January 30, 2006, one day before the final decree of absolute confirmation of the tax sale was entered on February 1, 2006, MERS provided notice that it was “assigning the bid and requesting the DEED be recorded in the name of Household Realty Corporation (MERS is acting/has acted as the agent for the real party in interest or beneficial owner), 1270 Northland Drive, Ste 200, Mendota Heights, MN 55120.” The assignment to Household by MERS of the ownership it obtained at the mortgage foreclosure sale gives Household Realty Corporation standing in this post-confirmation 3 judicial challenge to the tax sale. __________ 3 First Horizon Loan Corporation v. Adams County Tax Claim Contrast the facts in -3- 05-6758 CIVIL TERM PROCEDURE Respondents maintain that Household’s amended petition must be dismissed because they did not seek permission nunc pro tunc to file objections or exceptions to the tax sale. The Real Estate Tax Sale Law at Section 5860.607(a.1)(1) provides that notice shall be given by the Tax Claim Bureau within thirty days of the actual sale to each owner of the property: that the owner may fileobjections or that the property was sold and exceptionsrelating to the regularity and procedures with the court followed during the sale no later than thirty (30) days after the court has 4 made a confirmation nisi of the consolidated return. (Emphasis added.) Subsection 607(a.1)(2) sets forth the actual warning to be provided to the owner in this notice. Subsection 607(b.1), provides: If notice is given under subsection (a.1)(2), proof that notice under subsection (a.1)(1) was not received by the owner shall not defeat a sale If the mailed or published notice nor invalidate title to property. required under this section is defective or was served in an untimely manner, the court shall enter an order nunc pro tunc for cause and, upon proof of prejudice, shall grant the owner leave to file objections Bureau, 847 A.2d 774 (Pa. Commw. 2004). 4 Section 102 of the Real Estate Tax Sale Law contains the following definition: “OWNER,” the person in whose name the property is last registered, if registered according to law, or, if not registered according to law, the person whose name last appears as an owner of record on any deed or instrument of conveyance recorded in the county office designated for recording and in all other cases means any person in open, peaceable and notorious possession of the property, as apparent owner or owners thereof, or the reputed owner or owners thereof, in the neighborhood of such property; as to property having been turned over to the bureau under Article VII by any county, “owner” shall mean the county. -4- 05-6758 CIVIL TERM and exceptions. (Emphasis added.) -5- 05-6758 CIVIL TERM In re The Property of Continental Motels, Inc., In 32 Pa. Commw. 429 (1977), an owner of property sold at a tax sale filed a petition for leave to file objections and exceptions nunc pro tunc after the sale was confirmed and made absolute and a deed was transferred to the purchaser and recorded. The trial court granted the petition, and exceptions and objections were filed. The court then found the notice requirements had not been met, and an order was entered pursuant to Section 607(g), setting aside the sale. On appeal, the Commonwealth Court of Pennsylvania stated: The first issue before us is whether the use of a petition and rule to show cause is an improper procedure for the challenging of the validity of a tax sale after confirmation and recording of the tax deed. We note that here the petition and rule were not used to challenge the validity of the sale; rather, they were used simply to obtain leave to file the objections and exceptions by which such challenge was made. Nor do we find error in the lower court’s permitting the property owner to file its objections and exceptions nunc pro tunc. While section 607(g) of the Law, 72 P.S. §5860.607(g), establishes generally the invulnerability of sales confirmed absolutely, that subsection expressly excepts allegations “as to the giving of notice as required by the act . . .” and permits them to be heard after confirmation. The allegations here clearly fall within that exception. In the present case, the petition of Household is not brought under Section 607(b.1) which allows an owner leave to file objections and exceptions if published notices are defective or were served in an untimely manner in which case the court shall enter an order nunc pro tunc for cause and, upon proof of prejudice, grant the owner leave to file objections and exceptions. Rather, Household brought its petition, for which a rule was entered under Section 607(g), after the tax sale was confirmed -6- 05-6758 CIVIL TERM absolutely. Section 607(g) limits relief “except with respect to the giving of notice under the act, to the time of holding the sale, or to the time of petitioning the court for an order of sale.” There is no time limit in Section 607(g) for seeking relief judicially, in equity or In re The Property of by civil proceedings. While the Commonwealth Court in Continental Motels, Inc., supra, concluded that a petition and rule to show cause was a proper procedure for challenging the validity of a tax sale after confirmation and recording of the tax deed, that procedure was not used to challenge the validity of the sale but was “used to simply obtain leave to file the objections and exceptions by which such a challenge was made.” Notwithstanding, we are satisfied that Household’s petition for a rule under Section 607(g) to judicially set aside this tax sale, even though it did not petition for leave to file objections and exceptions, is not precluded because there is no time limit under the Section for seeking relief. Household’s judicial challenge is limited to the type of relief allowed under Section 607(g) after final confirmation and the Tax Bureau’s transfer of the deed to Halkias, i.e., relief based on a claim of inadequate notice under the Real Estate Tax Sale Law. Therefore, no petition to proceed nunc pro tunc is required and Household is not limited to seeking relief in equity or in another civil proceeding such as an action to quiet title. PETITION TO SET ASIDE TAX SALE Until 1827 Ritner Highway was sold to the mortgagee MERS at the Sheriff’s sale on December 7, 2005, the owners were the Nenningers. Household and respondents agree that the issue Household now raises pursuant to Section 607(g) as to “the giving -7- 05-6758 CIVIL TERM of notice under the act,” involves any notice that was required to be given to MERS. In Parkton Enterprises, Inc. v. Krulac, 53 Cumberland L.J. 84 (2003), the Sheriff of Cumberland County, on September 4, 2002, sold the property of Torres and Malave in foreclosure to the first mortgagee and executing creditor. On September 26, 2002, the property was sold at an upset tax sale to the Krulacs, to whom a deed from the Cumberland County Tax Claim Bureau was recorded on December 2, 2002. The Tax Claim Bureau knew that the property was listed for a Sheriff’s sale but did not check before the tax upset sale to determine if it was sold by the Sheriff. The Tax Claim Bureau did not provide the purchaser at the Sheriff sale with any notice of the tax sale. We concluded that even though the purchaser had knowledge that taxes were owed and overdue on the property, such knowledge did not equate to implied actual notice of the tax sale. We held that it was incumbent upon the Tax Claim Bureau, having received notice of a pending Sheriff sale, to use common sense business practices to make inquiry of the Sheriff before the tax upset sale on September 26, 2002, to determine if the property was sold. A check by the Tax Claim Bureau would have disclosed the sale by the Sheriff twenty-two days before the upset tax sale. We held that “[a]lthough the Tax Claim Bureau served all of the notices on the record owner within the timeframes required by the Real Estate Tax Law, the Bureau was constitutionally required to give notice to any new owner if reasonably ascertainable, which Parkton was.” An order setting aside the tax sale was entered. The Commonwealth Court affirmed, stating: -8- 05-6758 CIVIL TERM Certainly, as the trial court stated, it would have been reasonable for the Bureau to contact the Sheriff prior to the tax sale to determine whether there was a new owner of the Property. Because the Bureau failed to make a reasonable effort to discover the identity of the new owner of the -9- 05-6758 CIVIL TERM Property, i.e., Parkton, we conclude that the trial court properly set aside 5 the Tax Upset Sale and quieted title in Parkton. sub judice, In the case 1827 Ritner Highway was sold by the Sheriff in foreclosure to MERS on December 7, 2005. The next day, December 8, 2005, the property was sold at the upset tax sale to James Halkias. Although the Cumberland County Tax Claim Bureau was not under any legal obligation to give any pre-sale notice 6 to MERS as the mortgagee, it nevertheless, having been involved in the Parkton case, and anticipating that the property might be sold to MERS at the Sheriff sale, sent MERS October 6, 2005 notice on , of the tax sale scheduled for December 8, 2005, by two letters. One letter was sent to the address in Flint, Michigan, which is its address on the mortgage assignment to MERS recorded at Miscellaneous Book 689, Page 330. The Tax Bureau also sent MERS a notice at another address in Elmhurst, Illinois. Each was sent by certified mail. The letter sent to Flint, Michigan, was signed for and delivered on October 9, 2005, and the one sent to Elmhurst, Illinois, was signed for and delivered on October 11, 2005. Each letter described the property at 1827 Ritner Highway, North Newton Township, Cumberland County, Pennsylvania, the owner as Steve L. and Susan E. Nenninger, and stated: __________ 5 Parkton Enterprises, Inc. v. Krulac , 865 A.2d 295 (Pa. Commw. 2005). 6 Properties sold at an upset tax sale are conveyed “subject to the lien of every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in the upset price with which said property may have or shall become charged or for which it may be come liable.” 72 P.S. § 5860.609. -10- 05-6758 CIVIL TERM The above property is scheduled for an Upset Tax Sale for the collection of delinquent real estate taxes on December 8, 2005. To avoid said sale, the following amount must be paid to the Tax Claim Bureau before the date of sale at the above address: Tax parcel no. 30-11-0304-001 $4,610.03 If you have any questions regarding these matters, please contact the Cumberland County Tax Claim Bureau at (717) 240-6366. Enclosed please find a copy of your mortgage. December 9, 2005 On , the Cumberland County Tax Bureau sent MERS a post- sale notice that the property had been sold on December 8, 2005. Notice was sent to the Flint, Michigan, address and signed for and delivered on December 15, 2005; to the Elmhurst, Illinois, address and signed for and delivered on December 11, 2005; and to another address at 1270 Northland Drive, Suite 200, Mendota Heights, Minnesota, which was signed for and delivered on December 16, 2005. In each letter the 1827 Ritner Highway property was set out with a parcel number, and the notice, pursuant to Section 607(a.1)(2) of the Real Estate Tax Sale Law, set forth: WARNING “THE ABOVE PROPERTY HAS BEEN SOLD AT A TAX UPSET DECEMBER 8, 2005 SALE ON FOR THE COLLECTION OF NORTH DELINQUENT TAXES INCURRED IN THE MUNICIPALITY OF NEWTON TOWNSHIP, CUMBERLAND COUNTY, PENNSYLVANIA YOU MAY FILE OBJECTIONS OR EXCEPTIONS TO THE SALE IMMEDIATELY BUT NO LATER THAN THIRTY (30) DAYS FOLLOWING THE COMFIRMATION [SIC] NISI OF THE RETURN BY THE COURT. IF YOU HAVE ANY QUESTIONS PLEASE CALL YOUR ATTORNEY, THIS TAX CLAIM BUREAU AT THE FOLLOWING TELEPHONE NUMBER (717) 240-6366, OR THE COUNTY LAWYER REFERRAL SERVICE.” -11- 05-6758 CIVIL TERM Household now argues that the tax sale should be set aside because the pre- sale notice sent to MERS was not in the form required by Section 602(g) of the Real Estate Tax Sale Law, which provides: All notices required by this section other than the newspaper notice and notice in the legal journal shall contain the following provision which shall be conspicuously placed upon said notices and set in at least 10- point type in a box as follows: WARNING “YOUR PROPERTY IS ABOUT TO BE SOLD WITHOUT YOUR CONSENT FOR DELINQUENT TAXES. YOUR PROPERTY MAY BE SOLD FOR A SMALL FRACTION OF ITS FAIR MARKET VALUE. IF YOU HAVE ANY QUESTIONS AS TO WHAT YOU MUST DO IN ORDER TO SAVE YOUR PROPERTY, PLEASE CALL YOUR ATTORNEY, THE TAX CLAIM BUREAU AT THE FOLLOWING TELEPHONE NUMBER , OR THE COUNTY LAWYER REFERRAL SERVICE.” Household forgets that when the notices of the tax sale scheduled for December 8, 2005, were sent to MERS on October 6, 2005, MERS was a mortgagee and there was no requirement to send it notice. Therefore, Household’s position that the tax sale should now be set aside because of the form of the notices is chutzpah. MERS purchased the property at a tax sale on December 7, 2005, one day before the upset Parkton tax sale on December 8, 2005. The holding in , where the foreclosure sale occurred twenty-two days before the tax sale, thus triggering a requirement to send the purchaser notice of the tax sale, cannot realistically be applied here where the foreclosure sale was one day before the tax sale. Furthermore, the Tax Claim Bureau sent MERS a post-sale notice on December 9, 2005, one day after the tax sale, in the -12- 05-6758 CIVIL TERM form required in Section 607(a.1)(2) of the Real Estate Tax Sale Law. It is inexplicable that MERS, having received pre-sale and post-sale notices, did not protect its interest prior to the final decree of absolute confirmation entered on February 1, 2006. PETITION TO ORDER SATISFACTION OF MORTGAGE Household maintains in this Judicial proceeding to set aside a tax sale, that this court should order the purchaser, James Halkias, to satisfy the MERS mortgage. There is no such remedy. Besides, the Sheriff’s sale discharged the lien of MERS’ mortgage Pennsylvania Company v. Emmons, on 1827 Ritner Highway. See 338 Pa. 513 7 (1940). Therefore, there was no lien of the MERS’ mortgage on the property when it was purchased by Halkias and later purchased by the Shirks. ORDER OF COURT AND NOW, this day of September, 2007, the relief sought by IS DENIED. petitioner, Household Realty Corporation, By the Court, Edgar B. Bayley, J. Alan M. Minato, Esquire Woodcrest Corporate Center 111 Woodcrest Road, Suite 200 Cherry Hill, NJ 08003 For Household Realty Corporation Stephen D. Tiley, Esquire __________ 7 However, the unpaid mortgage indebtedness continued to exist against the Nenningers. -13- 05-6758 CIVIL TERM 5 South Hanover Street Carlisle, PA 17013 Solicitor, Cumberland County Tax Claim Bureau -14- 05-6758 CIVIL TERM Norman M. Yoffe, Esquire 214 Senate Avenue, Suite 404 Camp Hill, PA 17011 For James P. Halkias Robert Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 For Wayne Z. Shirk and Susan S. Shirk :sal -15- IN RE: PUBLIC UPSET SALE OF : IN THE COURT OF COMMON PLEAS OF PROPERTIES HELD BY THE : CUMBERLAND COUNTY, PENNSYLVANIA CUMBERLAND COUNTY TAX : CLAIM BUREAU ON DECEMBER 8, : 2005 TAX SALE LAW : : (1827 Ritner Highway, Shippensburg, : PA Tax Parcel #30-11-0304-001) : 05-6758 CIVIL TERM IN RE: PETITION TO SET ASIDE TAX SALE OR ORDER SATISFACTION OF MORTGAGE ORDER OF COURT AND NOW, this day of September, 2007, the relief sought by IS DENIED. petitioner, Household Realty Corporation, By the Court, Edgar B. Bayley, J. Alan M. Minato, Esquire Woodcrest Corporate Center 111 Woodcrest Road, Suite 200 Cherry Hill, NJ 08003 For Household Realty Corporation Stephen D. Tiley, Esquire 5 South Hanover Street Carlisle, PA 17013 Solicitor, Cumberland County Tax Claim Bureau Norman M. Yoffe, Esquire 214 Senate Avenue, Suite 404 Camp Hill, PA 17011 For James P. Halkias Robert Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 05-6758 CIVIL TERM For Wayne Z. Shirk and Susan S. Shirk :sal -2-