Zachary Simone, v. Lebanon County Tax Claim Bureau

Zachary Simone, v. Lebanon County Tax Claim Bureau

Civil Action-Constitutional Law-Real Estate Taxes-Failure to Pay-Upset Sale-Due Process-Notice Requirements-Strict Compliance-Doubt Regarding Receipt of Mailed Notice-Reasonable Efforts to Discover Whereabouts of Record Owner-Record of Real Estate Transfer-Additional Searches

Zachary Simone (“Simone”) was the record owner of property sold by the Lebanon County Tax Claim Bureau (“the Bureau”) for unpaid real estate taxes on September 11, 2023.  While the Bureau mailed a certified letter advising of the unpaid taxes to Simone on March 7, 2023 and received the return receipt for the letter on March 10, 2023, it was unclear whether the signature upon the return receipt was that of Simon.  Further, a return receipt for a Notice of Public Sale dated May 17, 2023 was not returned.  Following unsuccessful attempts at personal service, the Bureau performed additional searches to try to locate Simon, which search results indicated that mailings had been sent to the address listed for Simone.  The additional searches also revealed that real estate had been transferred to Simone in May of 2023, although the Bureau failed to search records of the Recorder of Deeds to attempt to obtain an address for Simone.  A Second Notice of Public Sale mailed to Simone on August 11, 2023, from which a return receipt was not received.  On September 5, 2023, the Court granted a Petition to Waive Personal Notice authorizing the Bureau to sell the property without the need to serve Simone personally.  Following the sale of the property, Simone filed a Petition seeking to set aside the sale of the property due to deficiencies in the notice provided by the Bureau.  Simone asserts that the additional searches conducted by the Bureau that revealed that a transfer of real estate to Simone had occurred should have compelled the Bureau to conduct a search with the Office of the Recorder of Deeds to attempt to serve him, which the Bureau failed to perform.     

1.  A tax claim bureau strictly must comply with the notice provisions of the Real Estate Tax Sale Law (“RETSL”), Title 72 P.S. § 5860.101 et seq., in order to guard against the deprivation of property without due process of law.

2.  Any failure to comply with any strict requirements of the RETSL mandates the tax sale be set aside. 

3.  The RETSL requires three (3) different forms of notice to property owners prior to an upset tax sale including publication, posting and mail. 

4.  Under § 5860.607a, when a doubt is raised concerning the receipt of mailed notice, the tax claim bureau is required to conduct reasonable efforts to discover the whereabouts of, and to provide notice to, the record owners of the property scheduled to be exposed to an upset sale.

5.  In such situations, the tax claim bureau must determine the owners of record and use ordinary common sense business practices to ascertain proper addresses where notice of the tax sale may be given.

6.  The RETSL provides that the tax claim bureau shall make the additional notification efforts identified when a mailed notification is returned without the required personal signature of the address, when there are circumstances raising a significant doubt as to the actual receipt of notice or when a notice is not returned or acknowledged at all. 

7.  Although a tax claim bureau is not required to conduct a title search, the additional searches included in the additional notification requirements of the RETSL, including a search of the records of the Recorder of Deeds, are mandatory minimum inquiries required when mailings are returned or receipt of notice is in doubt. 

8.  When the a tax claim bureau admits that it failed to make an effort to discover the whereabouts of the intended recipients of a notice of tax sale by consulting the Recorder of Deeds, the Prothonotary or the local telephone directory, the tax sale will be set aside.

9.  The Bureau failed to comply with the requirements of the RETSL warranting setting aside of the sale where the Bureau acknowledged that it never received a signed return receipt for the Notice of Tax Sale dated May 17, 2023, the signature on the return receipt from the March 7, 2023 mailing was illegible, the results of the Internet search should have alerted the Bureau that a reasonable doubt existed that Simone received notice of the sale that triggered the necessity of additional notification efforts pursuant to Section 607a and the Bureau failed to perform the mandated Recorder of Deeds search despite the results of the Internet search indicating that Simone had purchased another property in May of 2023. 

L.C.C.C.P. No. 2023-01314, Opinion by John C. Tylwalk, President Judge, April 19, 2024.

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

                                                            PENNSYLVANIA

                                                            CIVIL DIVISION

ZACHARY SIMONE,                                               :           NO. 2023-01314

            Petitioner                                             :

                                                                        :

            v.                                                         :

                                                                        :

LEBANON COUNTY TAX                          :

            CLAIM BUREAU,                            :

            Respondent                                         :

                                                            ORDER OF COURT

            AND NOW, this 19^th day of April, 2024, upon consideration of the Petition to Set Aside Real Estate Tax Sale of Zachary Simone, the response of Lebanon County Tax Claim Bureau, the evidence adduced at the hearing conducted on December 11, 2023 and the Briefs submitted by the parties and Buyer BP Real Estate Group LP, it is hereby Ordered that the Petition is GRANTED.  The sale of the property located at 605 Cumberland Street, Lebanon, Pennsylvania on September 11, 2023 is hereby SET ASIDE in accordance with the accompanying Opinion. 

                                                                        BY THE COURT:

                                                                        ___________________________, P.J.

                                                                        JOHN C. TYLWALK

JCT/jah

Cc:  Bret M. Wiest, Esquire/Buzgon Davis Law Offices

        Zachary Simone/884 Richard Drive/Lebanon, PA  17046

        John N. Quain Jr., Esquire/Barley Snyder/126 East King Street/Lancaster,

                PA  17602

        Judith Huber, Esquire/Law Clerk

                        IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

                                                            PENNSYLVANIA

                                                            CIVIL DIVISION

ZACHARY SIMONE,                                               :           NO. 2023-01314

            Petitioner                                             :

                                                                        :

            v.                                                         :

                                                                        :

LEBANON COUNTY TAX                          :

            CLAIM BUREAU,                            :

            Respondent                                         :

APPEARANCES:

ZACHARY SIMONE                                               SRL

BRET M. WIEST, ESQUIRE                     FOR LEBANON COUNTY

BUZGON DAVIS LAW OFFICES                TAX CLAIM BUREAU

JOHN M. QUINN, JR., ESQUIRE             FOR BP REAL ESTATE

BARLEY SNYDER                                          INVESTMENT GROUP LP

OPINION, TYLWALK, P.J., APRIL 19, 2024.

Petitioner Zachary Simone (“Simone”) was the record owner of property located at 605 Cumberland Street in the City of Lebanon, (“the Property”).  The Property was sold by the Lebanon County Tax Claim Bureau (“the Bureau”) for unpaid 2021 real estate taxes on September 11, 2023.  BP Real Estate Investment Group LP (“BP Real Estate”) was the successful bidder at the tax sale. 

Simone has filed a Petition seeking to set aside the sale of the Property, claiming that there were deficiencies in the notice given to him by the Bureau prior to the sale.   We conducted a hearing on the Petition on December 11, 2023.  The transcript of the hearing has been lodged, the parties have filed post-hearing Briefs and the matter is now before us for disposition.

At the hearing, Belinda Spicer, Deputy Director of the Bureau (“Spicer”), explained the procedure followed by the Bureau for the collection of delinquent taxes.  Spicer testified that delinquent tax accounts get turned over to the Bureau in the January following the year for which the taxes are unpaid.  The Bureau first sends out a first-class letter.  If the taxes are not paid, a second notice is sent by certified mail, restricted delivery, to the owners of the property.  A reminder letter is then sent in December.  During the second year that taxes remain unpaid, the Bureau sends a notice of public sale in May.  In July, the Sheriff’s Office attempts to make personal service and notice of the tax sale is posted on the subject property.  In August, a second notice of sale is sent with a certificate of mailing. If the Bureau is unable to get good service, the Bureau petitions the Court for an order authorizing alternative service.   The tax sale is then conducted in September. 

Spicer confirmed that this procedure was followed in this case.  The Bureau sent out the first reminder letter that taxes were unpaid by first-class mail when the list of properties with unpaid 2021 taxes was turned over to her office.  (Exhibit “2”)  The Bureau sent a certified letter to Simone on March 7, 2023.  (Exhibit “1”)  The Bureau received the return receipt for the letter on March 10, 2023; however, it was unclear whether the signature was that of Simone or whether someone else had signed the receipt.  (Exhibit “3”) 

The Bureau sent the Notice of Public Sale dated May 17, 2023 by certified mail.  (Exhibit “2”)  That Notice indicated that the 2021 taxes on the Property remained unpaid and set forth the procedure which the Bureau would follow (including sale of the Property) until the taxes were paid.   The Bureau presented the postal tracking with the certified letter number dated June 12, 2023 for the Notice indicating that it had been received at the postal facility on June 8, 2023 and that it was in transit.  (Exhibit “4”)  However, the Bureau did not receive a return receipt with a signature or any other information on the status of that certified mailing from the post office.

All mailings were sent to 605 Cumberland Street which was the address on record with the Lebanon County Tax Assessment Office for Simone.  None of the pre-sale mailings were returned to the Bureau and the Bureau never received a notice from the post office indicating that a forwarding address was on file for Simone.  After the sale was conducted and the Property had been purchased by BP Real Estate, Spicer sent out another notice to Simone.  The notice that Spicer sent out after the sale was the only one returned to the Bureau marked “unclaimed.”

The Sheriff attempted to make personal service of the Notice of Sale at the Property on three separate occasions – on July 13, 2023, July 17, 2023, and July 18, 2023.  (Exhibit “8”)  The Notice was posted on the front door of the Property on July 13, 2023.  At that point, the Sheriff’s Office notified Spicer that there was an active Domestic Relations Bench Warrant for Simone and that the Sheriff had also been attempting to serve Simone with that Bench Warrant. ^[1]

Due to the problems with service, Spicer had performed additional searches in an attempt to locate Simone.  Spicer performed a Google search, a LexisNexis search, a court search, and a voter registration search.  The Bureau introduced Exhibit “6,” which was a printout of the results of Spicer’s search.  Spicer noted that her searches all indicated Simone’s address to be 605 Cumberland Street. 

On August 11, 2023, the Bureau sent a Second Notice of Public Sale to Simone at 605 Cumberland Street.  (Exhibit “9”)  The Bureau presented a  Postal Service Certificate of Mailing for that Notice.  (Exhibit “5”)  This Certificate confirmed that the notice had been sent, but did not provide for a signed receipt to be sent back to the Bureau. 

Due to the failed attempts at personal service, the Bureau filed a Petition to Waive Personal Notice with the Court.  The Petition was granted by Order of Court dated September 5, 2023.  That Order provided that the requirement of personal service was waived and authorized the Bureau to sell the Property without the need to serve Simone personally.  Once that Order was received, the Bureau proceeded with listing the Property for the September 11, 2023 sale.  Spicer confirmed that throughout the two-year period, she never received any communications from Simone. 

During cross-examination, Spicer acknowledged that Exhibit “6” indicated an entry dated June 6, 2023 regarding Lebanon County real estate transactions for the time period May 16 to May 30.   That entry indicated that a transfer of real estate from Castle Stone, LLC to Zachary Simone for $187,500 had occurred during that time period.  When asked whether she had searched for Simone’s name in the Recorder of Deeds Office, Spicer indicated that she did not conduct such a search. 

At the hearing, Simone testified that he had moved to 884 Richard Drive in June 2023.  He argued that the date indicated in the real estate transfer entry in  Exhibit “6” should have triggered the Bureau to search real estate records.  He believed that the Bureau would have found his new address if such a search had been conducted.  He also stated his belief that the Sheriff’s Office was aware of his location as he had interactions with them after he moved to his new address.  He further claimed that he had problems with receiving mail at his new address. 

On cross-examination, Simone acknowledged that he had lived at the Property from 2016 until he listed it for sale in June 2023.  In June 2023 he moved to 884 Richard Drive and was back and forth between the two addresses at the time of the time of the certified mailing of the May Notice.  He did not recall signing for the first mailing and did not believe it was his signature on the return receipt.  He acknowledged that the Bench Warrant had been lodged for his arrest and was active throughout most of 2023.  He also acknowledged that he had never communicated his new address in writing to either the Bureau or the Lebanon County Tax Assessment Office.  He admitted that the problems with receiving his mail only started after he moved to 884 Richard Drive.  Simone indicated that the deed for 884 Richard Drive had been recorded at the time of settlement in May 2023. 

The purpose of the Real Estate Tax Sale Law (“RETSL”) is to ensure the collection of taxes.  In re Consolidated Return of Tax Claim Bureau of County of Beaver from August 16, 2011 Upset Sale for Delinquent Taxes, 105 A.3d 76, 81 (Pa. Commw. 2014), appeal denied 121 A.3d 497 (Pa. 2015).  A tax claim bureau must strictly comply with the notice provisions of the RETSL in order to guard against the deprivation of property without due process of law.  In re Tax Sale of 2003 Upset, 860 A.2d 1184, 1187 (Pa. Commw. 2004).  Any failure to comply with any strict requirement of the RETSL, including notice requirements, mandates that the tax sale be set aside.  In re Consolidated Return of Tax Claim Bureau of County of Beaver, supra, 105 A.3d at 81.

A property owner’s right to notice “prior to commencing with an upset tax sale [is] established pursuant to the Due Process Clause of the Fourteenth Amendment to the United States Constitution and by the Law.” Rice v. Compro Distributing, Inc., 901 A.2d 570, 574 (Pa.Cmwlth. 2006). The United States Supreme Court has held that due process is implicated in any taking of property for the collection of taxes, stating:

[p]eople must pay their taxes, and the government may hold citizens accountable for tax delinquency by taking their property. But before forcing a citizen to satisfy his debt by forfeiting his property, due process requires the government to provide adequate notice of the impending taking.

In re Consolidated Reports and Return by the Tax Claims Bureau of Northumberland County of Properties Exposed for Scheduled Sale September 19, 2012, 132 A.3d 637, 644 (Pa. Commw. 2016), citing Jones v. Flowers, 547 U.S. 220, 226, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006).

Due process is satisfied when the Bureau, before commencing with a tax sale, provide[s] notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.  … 

The notice provisions of the Law are designed to guard against deprivation of property without due process. … Because the government actor attempting to take property bears the constitutional duty to provide notice prior to a tax sale, our inquiry into whether adequate notice was provided must focus not on the alleged neglect of the owner, which is often present in some degree, but on whether the activities of the Bureau comply with the requirements of the [Law]. … However, even technical compliance with the statute may not always satisfy the demands of due process since the Law states the minimum effort to be done by a tax claim bureau. … Due process requires that the practicalities and peculiarities of the case are considered and given their due regard.

In re Consolidated Reports and Return by the Tax Claims Bureau of Northumberland County, 132 A.3dat 644 (citations omitted).

            The notice requirements of the RETSL, 72 P.S. §§5860.101 – 5860.803  which are applicable to this matter provide, in part:                      

§ 5860.602. Notice of sale

• At least thirty (30) days prior to any scheduled sale the bureau shall give notice thereof, not less than once in two (2) newspapers of general circulation in the county, if so many are published therein, and once in the legal journal, if any, designated by the court for the publication of legal notices. Such notice shall set forth (1) the purposes of such sale, (2) the time of such sale, (3) the place of such sale, (4) the terms of the sale including the approximate upset price, (5) the descriptions of the properties to be sold as stated in the claims entered and the name of the owner.

(e) In addition to such publications, similar notice of the sale shall also be given by the bureau as follows:

• At least thirty (30) days before the date of the sale, by United States certified mail, restricted delivery, return receipt requested, postage prepaid, to each owner as defined by this act.

(2) If return receipt is not received from each owner pursuant to the provisions of clause (1), 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, at his last known post office address by virtue of the knowledge and information possessed by the bureau, by the tax collector for the taxing district making the return and by the county office responsible for assessments and revisions of taxes. It shall be the duty of the bureau to determine the last post office address known to said collector and county assessment office.

(3) Each property scheduled for sale shall be posted at least ten (10) days prior to the sale.

72 P.S. §5860.602.     

            Thus, the RETSL requires three different forms of notice to property owners prior to an upset tax sale:  publication, posting, and mail.  Famageltto v. County of Erie Tax Claim Bureau, 133 A.3d 337, 339 (Pa. Commw. 2016).  When a doubt is raised concerning the receipt of a mailed notice, Section 5860.607a requires tax claim bureaus to conduct reasonable efforts to discover the whereabouts of, and provide notice to, the record owners of property which are scheduled to be exposed to an upset tax sale:

                                                § 5860.607a. Additional notification efforts

(a) When any notification of a pending tax sale or a tax sale subject to court confirmation is required to be mailed to any owner, mortgagee, lienholder or other person or entity whose property interests are likely to be significantly affected by such tax sale, and such mailed notification is either returned without the required receipted personal signature of the addressee or under other circumstances raising a significant doubt as to the actual receipt of such notification by the named addressee or is not returned or acknowledged at all, then, before the tax sale can be conducted or confirmed, the bureau must exercise reasonable efforts to discover the whereabouts of such person or entity and notify him. The bureau’s efforts shall include, but not necessarily be restricted to, a search of current telephone directories for the county and of the dockets and indices of the county tax assessment offices, recorder of deeds office and prothonotary’s office, as well as contacts made to any apparent alternate address or telephone number which may have been written on or in the file pertinent to such property. When such reasonable efforts have been exhausted, regardless of whether or not the notification efforts have been successful, a notation shall be placed in the property file describing the efforts made and the results thereof, and the property may be rescheduled for sale or the sale may be confirmed as provided in this act.

• The notification efforts required by subsection (a) shall be in addition to any other notice requirements imposed by this act.

72 P.S. §5860.607a.   This responsibility has been summarized as “determining the owners of record and then to use ordinary common sense business practices to ascertain proper addresses where notice of the tax sale may be given.”  Id., citing In re Tax Sale of Real Property Situated in Jefferson Township, 828 A.2d 475, 479 (Pa. Commw. 2003), aff’d 859 A.2d 471 (Pa. 2004).  A tax claim bureau is not required to personally serve an owner at any address other than that of the subject property and is not required to telephone the owner or to conduct any “extraordinary” efforts to provide notice.  Famageltto v. County of Erie Tax Claim Bureau, 133 A.3d 337, 339 (Pa. Commw. 2016). 

As noted above, Section 607a of the RETSL provides that the Bureau “shall” make the additional notification efforts listed therein when a mailed notification is returned without the required personal signature of the address, when there are circumstances raising a significant doubt as to the actual receipt of notice, or when a notice is not returned or acknowledged at all.  72 P.S. §5860.607a.  The word “shall” in a statute carries an imperative or mandatory meaning.  In re Canvass of Absentee Ballots of November 4, 2003 General Election, 843 A.2d 1223, 1231 (Pa. 2004).  Although a bureau is not required to conduct a title search, Pfeifer v. Westmoreland County Tax Claim Bureau, 127 A.3d 848 (Pa. Commw. 2015), the additional searches included in the additional notification requirements of Section 607a of the RETSL, including a search of the records of the recorder of deeds, are the statutory mandatory minimum inquiries required when mailings are returned or receipt of notice is in doubt.  See, Rice v. Compro Distributing, Inc., 901 A.2d 570, 573 (Pa. Commw. 2006).  Thus, when a tax claim bureau admits that it failed to make an effort to discover the whereabouts of the intended recipients of a notice of tax sale by consulting the recorder of deeds, the prothonotary or the local telephone directory, a tax sale will be set aside.  Willard v. Delaware County Tax Claim Bureau, 921 A.2d 1273 (Pa. Commw. 2007). 

Simone contends that the Tax Claim Bureau failed to comply with the requirements of Section 607a of the RETSL.  We must agree.   While the Bureau was not required to personally serve Simone and we believe that the Bureau fully complied with the notice requirements of Section 602, Spicer acknowledged that the Bureau never received a signed return receipt for the Notice of tax sale dated May 17, 2023.   This fact, along with the illegible signature on the return receipt for the March 7, 2023 mailing and the results of Spicer’s internet search, should have alerted the Bureau that there existed a reasonable doubt as to Simone having received notification of the impending sale and that additional notification efforts under Section 607a were necessary.    Although Spicer took reasonable efforts to locate Simone, she acknowledged that she did not perform the mandated search in the Recorder of Deeds Office despite the results of her internet search indicating that Simone had purchased another property in May 2023.  Thus, despite the efforts undertaken by the Bureau, we are constrained to set aside the sale. 

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[1] Spicer indicated that the Bench Warrant had just been resolved on the morning of the hearing.