Losing Real Estate at a Tax Sale

Can You Lose Real Estate at a Tax Sale?

Pennsylvania real estate owners can lose their real estate if they don’t pay their real estate taxes. With the exception of the cities of Philadelphia and Pittsburgh, all Pennsylvania counties have a central county Tax Claim Bureau that is responsible for collecting delinquent taxes. The cities of Philadelphia and Pittsburgh also hold tax sales, but they follow different procedures from the statewide Tax Claim Bureaus.

“Upset” Sales

Tax Claim Bureaus sell real estate confiscated from delinquent taxpayers in the fall of each year, at “upset” sales. An upset sale is one where the buyer takes title to the property subject to all existing mortgages and liens. Because most buyers at tax sales don’t want properties that are subject to mortgages and liens, many properties don’t actually sell at the fall upset sales. The Tax Claim Bureaus then have the authority to petition the court for a “judicial” sale. The judicial sales are often held in the early months of the following year. At judicial sales, the buyer takes clear title to the property, subject only to certain limited federal and Commonwealth liens.

Recent Cases

In a recent case where a homeowner lost a property at a judicial sale, he was able to have the sale reversed, or “set aside,” because the Tax Claim Bureau did not precisely comply with the notice requirements of the Real Estate Tax Sale Law (RETSL). The sale was published twice in local newspapers. In addition, the Tax Claim Bureau hired a constable to serve notice on the homeowner at a restaurant that he owned. The constable gave the sale notice paperwork to the homeowner’s adult stepson at the restaurant and explained the details about the scheduled sale; the stepson agreed to give the documents to his stepfather. However, the stepson put the documents on a shelf in the restaurant kitchen, never gave them to his stepfather, and simply told his stepfather that someone had come by the restaurant with a back‑rent collection claim.

The RETSL requires that the Tax Claim Bureau use the county sheriff’s office to serve all notices of judicial sales personally on homeowners. The sale was set aside because the homeowner was not personally served and because the Tax Claim Bureau used an elected constable, rather than the county sheriff’s office, to serve the notice.

Notice Requirements

The stated purpose of the RETSL is “to ensure the collection of taxes, and not to deprive citizens of their property.” For this reason, the courts read the notice requirements of the RETSL very strictly. Because many properties don’t sell at the annual fall upset sales, some homeowners become careless or casual about the subsequent judicial sale notices. The judicial sales should be taken very seriously; Pennsylvania property owners can lose valuable real estate at judicial sales. If your real estate taxes are delinquent, visit your county Tax Claim Bureau and learn what you can do to save your title to your real estate.