Brown v. Chester County Tax Claim Bureau & Chester County

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jay R. Brown, :

Appellant :

:

v. : No. 754 C.D. 2017

: ARGUED: December 4, 2017

Chester County Tax Claim :

Bureau and Chester County :

BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE MICHAEL H. WOJCIK, Judge

HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION BY

SENIOR JUDGE LEADBETTER FILED: January 29, 2018

Jay R. Brown (Brown) appeals from an order of the Court of Common

Pleas of Chester County (trial court) that denied his post-trial motions from an order

entering judgment in favor of the Chester County Tax Claim Bureau (Bureau) and

Chester County in his declaratory judgment action seeking to resolve the parties’

respective rights as to a manufactured home situated on Brown’s real estate. We

affirm.

Brown owns real property located at 212 E. Summit Avenue, West

Grove, Chester County, which Arturo Arevalos Santoyo leased for placement of his

manufactured home (the Subject Home). When Santoyo became delinquent in

paying taxes on the Subject Home, the taxing districts filed liens pursuant to the Real

Estate Tax Sale Law (Tax Sale Law).1 (February 3, 2017, Trial Court Opinion,

Findings of Fact (F.F.) Nos. 4, 5, and 7.) In 2012, the Bureau initiated statutory

1

Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101 - 5860.803.

procedures for the collection of unpaid taxes by upset tax sale. Santoyo was present

at the property in August 2012 when he was personally served. Service was also

made by posting the Subject Home and by publication. (Id., Nos. 8 and 9.) Although

the Subject Home was exposed at a September 2012 upset tax sale with an upset

price of $8,750.21, no bids were received. (Id., Nos. 11 and 12.) Santoyo vacated

the Subject Home in December 2012, leaving it situated on Brown’s real property.

(Id., No. 13.)

In December 2014, Brown provided Santoyo with a notice of

abandonment pursuant to the Manufactured Home Community Rights Act

(Manufactured Home Act).2 Brown also sent copies of the notice to the taxing

authorities, including the Bureau. (Id., Nos. 14 and 15.) The Bureau’s director

responded to the notice, stating, in pertinent part, as follows:

You may not be aware that the property/parcel was

exposed with no bids received at the 9/10/2012 Upset Tax

Sale. Once a property is exposed at an upset sale and no

bids are received, there is no right of redemption.

Therefore, any subsequent action to transfer title or declare

the property abandoned by Jay Brown and/or Janet Brown,

their agents, a manufactured home property management

company or any other lien holder is a nullity.

The property is currently in judicial tax sale preparation

status and will be exposed at a future judicial tax sale.

(Director’s January 5, 2015, Letter, Defendant’s Exhibit 1; Supplemental

Reproduced Record (S.R.R.) at 1.)

Notwithstanding the Bureau’s correspondence, Brown filed an action

pursuant to the Manufactured Home Act in his magisterial district captioned “Janet

Brown, Jay Brown v. Arturo Arevalos Santoyo.” (F.F. No. 18.) In April 2015, a

2

Act of November 24, 1976, P.L. 1176, as amended, 68 P.S. §§ 398.1 - 398.10.3.

2

Magisterial District Justice (MDJ) determined that Santoyo had abandoned the

Subject Home and entered a money judgment in the amount of $7,646.80 against

him.3 (Id., No. 17.) Consequently, pursuant to the Manufactured Home Act, Brown

arranged for an auction of the Subject Home. Brown bid $5,000 at the July 2015

auction and the funds were distributed to him pursuant to the money judgment. (Id.,

No. 20.)

Subsequently, the Bureau refused to certify the Subject Home as free

and clear from all tax liability pursuant to the MDJ’s determination of abandonment.

Specifically, it persisted in asserting its claim to outstanding taxes or liens on the

Subject Home and in refusing to recognize Brown’s ownership claim. In turn,

Brown maintained that he owned the Subject Home and that, pursuant to the

Manufactured Home Act, the Bureau was not entitled to enforce its claim.

Consequently, Brown commenced his July 2015 declaratory judgment action in

common pleas court seeking the following findings and determinations:

A. Brown has satisfied the terms of the

[Manufactured Home Act], and the disposal and/or sale of

the [Subject Home] is lawful.

B. County may not assert a claim or opinion that the

implementation of the Abandonment is a “nullity” under

the Tax [Sale Law].

C. The Purchaser of the [Subject Home] . . . and

Brown, as the owner of the real property on which [it] is

located are not liable for any unpaid taxes or liens on [it].

D. County may not impose any restriction,

obligation on the manufactured home community,

community owner, purchaser or any new tenant or resident

3

Section 10.1 of the Manufactured Home Act, 68 P.S. § 398.10.1, entitled “determination of

abandonment,” was added by Section 2 of the Act of October 24, 2012, P.L. 1267, and became

effective on December 24, 2012. As the trial court observed, the effective date was subsequent to

the September 2012 upset tax sale. (Trial Court’s May 24, 2017, Order at 2 n.1.)

3

attempting to locate or lease [the] above described home

because of tax liability on [it]. County shall not refuse to

issue or delay issuing any permits, licenses or other

required approvals for the occupancy of this home or lot.

E. Liability for any taxes assessed and imposed on

the resident or liability to satisfy any lien for such taxes

shall continue to be the responsibility of the resident and

shall not be assessed and imposed on the real estate on

which the [Subject Home] was or is located, the

manufactured home community or the purchaser of the

[Subject Home], all of which is as provided for in [The

General County Assessment Law4].

(July 27, 2015, Complaint-Declaratory Judgment, Wherefore Clause at 5.)

Following a non-jury trial, the trial court ordered that judgment be

entered against Brown. In February 2017, Brown filed post-trial motions and a

notice of appeal with our Court. In May 2017, we quashed Brown’s appeal at 194

C.D. 2017 and remanded the matter to the trial court to rule on the post-trial motions.

Following its denial of Brown’s post-trial motions, the trial court entered judgment

in June 2017. Brown’s appeal after remand is now before us.

Reorganized and reworded for clarity, the cognizable issues before us

are as follows: (1) whether the trial court erred in determining that the Manufactured

Home Act was inapplicable to the Subject Home after its exposure at the

unsuccessful upset tax sale conducted pursuant to the Tax Sale Law; (2) whether

the trial court erred in determining that the Bureau did not improperly divest claims

protected under the nondivestiture of liens provision found in Section 609 of the Tax

Sale Law, 72 P.S. § 5860.609, including claims for ground rent, after the upset tax

sale but before any judicial sale; and (3) whether the trial court erred in determining

that the loss of an owner’s right of redemption after an upset tax sale pursuant to

4

Act of May 22, 1933, P.L. 853, as amended, 72 P.S. §§ 5020-1 - 5020-602.

4

Section 501(c) of the Tax Sale Law, 72 P.S. § 5860.501(c),5 divested claims against

the property that are protected under Section 609’s nondivestiture provision.6

In order to provide a framework for our analysis, we recite the

following provisions of the Tax Sale Law. The provision pertaining to fixing an

upset sale price and providing for what must occur in the absence of a bid equal to

that price, in pertinent part, provides:

Upset sale price

No sale of property shall be made by the bureau

unless a bid equal to the upset price is made. If no bid

equal to the upset price is received, the sale shall be

continued without further advertisement in order to give

the bureau a chance to sell the property at private sale, or

to petition court for an order to sell the same, freed and

discharged of all liens as hereafter provided. No upset sale

may be continued beyond the end of the calendar year, and

no property may be sold at private sale or judicial sale

unless the property has first been exposed to upset sale and

was not sold at upset sale.

5

Although Brown identifies this section as Section 503(c) in his statement of issues, it appears

from the remainder of his brief that he meant to say Section 501(c). (See Brown’s Brief at 11 and

16.)

6

Brown also posits an issue as to whether the trial court erred in determining that the Bureau

was not required to provide proof that public notice of the upset tax sale was provided to all

“owners of properties described in this notice and to all persons having liens, judgments or

municipal or other claims against such properties.” Section 602(d) of the Tax Sale Law, 72 P.S.

§ 5860.602(d) (emphasis added). However, Brown waived any issue pertaining to defective notice

or lack thereof regarding the upset tax sale by failing to raise it in his request for declaratory relief.

In any event, Brown asserted that Santoyo complied with the terms of his lease until on or

about December 2012, at which time he vacated the Subject Home without notice and in breach

of his lease. (July 27, 2015, Complaint-Declaratory Judgment at ¶ 8; Brown’s Brief at 7.) In this

regard, the trial court observed: “Based on the ruling that [Brown] received from the [MDJ], rent

arrears began to accrue in or about October, 2013.” (Trial Court’s May 24, 2017, Order at 2 n.1.)

These dates are somewhat in contradiction to Brown’s statement in another portion of his brief

that his right to a claim existed at the time of the September 2012 upset tax sale. (Brown’s Brief

at 18.) Having a right to a claim is different from having an actual claim.

5

Section 605 of the Tax Sale Law, 72 P.S. § 5860.605. Accordingly, following the

Subject Home’s exposure at the upset tax sale in the present case, one of the Bureau’s

options would have been to petition for a judicial sale.

A judicial sale is a ministerial function of a non-judicial governmental

unit. In re: Tax Sale Pursuant to the Real Estate Tax Sale Law of 1947, Appeal of:

Cathy Holler, 8 A.3d 358, 364 (Pa. Cmwlth. 2010). Two provisions pertaining to

such sales, in pertinent part, provide:

Petition for judicial sale

In cases where the upset price shall not be bid at any

such sale, the sale shall be continued, but not beyond the

end of the calendar year, without further advertising, and

the bureau may, at any time during or after the

continuance, and shall, immediately at the written

direction of a taxing district, file its petition in the court of

common pleas . . . to sell the property under sections 612

[judicial sale] and 612.1 [county commissioners’ ability to

bid and purchase property]. . . . Upon the presentation of

such petition, accompanied with searches showing the

state of the record and the ownership of the property and

all tax and municipal claims, liens, mortgage, ground

rents, charges and estates against the same, the court shall

grant a rule upon all parties thus shown to be interested to

appear and show cause why a decree should not be made

that said property be sold, freed and cleared of their

respective tax and municipal claims, liens, mortgages,

charges and estates, except separately taxed ground rents.

Section 610 of the Tax Sale Law, 72 P.S. § 5860.610. The second provision

provides:

Mandatory judicial sale

If within the period of ten (10) months after the date

of the scheduled upset sale, the bureau has not filed a

petition for a judicial sale under section 610 or the

property has not been sold at private sale, the bureau shall,

within the next immediately following two (2) months, file

6

a petition for judicial sale of the property in the manner set

forth in section 610.

Section 616 of the Tax Sale Law, 72 P.S. § 5860.616.7 Having set forth the relevant

statutory framework, we turn now to the applicability of the Manufactured Home

Act after the Subject Home’s exposure at the upset tax sale.

For at least two reasons, we conclude that the trial court correctly

determined that the Manufactured Home Act was inapplicable to the Subject Home

after its exposure at the upset tax sale. First, our Pennsylvania Supreme Court has

held:

When a tax sale is commenced under a particular

Act of Assembly, the procedure therein prescribed must be

followed and under that act alone must the validity and

7

Although the Bureau advised Brown that the Subject Home was in “judicial tax sale

preparation status,” it had not yet petitioned for a judicial sale. Further, once Brown filed his

declaratory judgment action, it decided to delay initiating judicial sale proceedings due to the

pendency of that action. (F.F. No. 22.) At any rate, although the Bureau’s delay in pursuing a

judicial sale commensurate with the Tax Sale Law is concerning, Brown asserted only that it had

not yet conducted a judicial sale, not that its failure to do so was problematic. (See July 27, 2015,

Complaint –Declaratory Judgment, ¶ 18.) Nonetheless, we find it sufficiently troubling to touch

upon the law regarding delay in initiating judicial sales.

In a case where the petition for judicial sale was filed more than eight years after the date of

the scheduled upset sale, we determined that the ten-month provision in Section 616 was directory

and not mandatory. In re: Sale of Real Estate by Lackawanna Cty. Tax Claim Bureau, 22 A.3d

308, 315 (Pa. Cmwlth. 2011). In so concluding, we observed the following:

Section 616 contains no provision barring judicial sale more than

one year after an unsuccessful upset sale, and we have found no case

law addressing whether [it] prohibits the judicial sale of property

after more than one year has passed from the date of the

unsuccessful upset sale. Also, although [it] directs that a judicial

sale “shall” be conducted within a year of the upset sale, [it] does

not provide a specific consequence for failure to [do so] within that

time period.

Id. at 314-15. Accordingly, we surmised that the mandatory judicial sale provision was “enacted

to impose a mandatory judicial sale, which could be enforced by the interested party through a writ

of mandamus to compel the Bureau to act pursuant to Section 616.” Id. at 315.

7

effect of the sale be tested. Other legislation providing a

different procedure or result cannot be used either to

sustain such sale or secure additional rights or results.

The act under which the proceeding is had must show the

authority and the effect of such a sale.

Pacella v. Washington Cty. Tax Claim Bureau, 10 A.3d 422, 429-30 (Pa. Cmwlth.

2010) (emphasis added) (quoting Gordon v. Harrisburg, 171 A. 277, 278 (Pa.

1934)). As applied to the taxpayer in Pacella, the effect of the Supreme Court’s

holding was that he could not use what is commonly known as the Municipal Claims

and the Tax Liens Act8 to exercise a right to redeem his residential real property

following an upset sale for tax delinquency held pursuant to the Tax Sale Law.

By way of analogy to the present case, Brown could not use the

Manufactured Home Act to exercise any rights regarding the Subject Home

following the Bureau’s commencement of proceedings under the Tax Sale Law

pertaining to that property. See also Richards v. Schuylkill Cty., 161 A.2d 26 (Pa.

1960) (holding that, where a county has accepted in its entirety the provisions of the

Tax Sale Law, it becomes the exclusive authority governing that county’s sale of

land for taxes). Accordingly, after the exposure of the Subject Home at the upset

tax sale under the Tax Sale Law, the Manufactured Home Act was inapplicable.9

Second, Brown improperly employed the Manufactured Home Act in

his magisterial action against former owner Santoyo because, by that time, the

8

Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101 - 7505.

9

At oral argument before this Court, counsel for the Bureau acknowledged that the Bureau

had permitted manufactured home park owners to proceed under the Manufactured Home Act

before upset tax sales. (See also January 26, 2017, Hearing, Notes of Testimony (N.T.) at 26-27;

Reproduced Record (R.R.) at 32-33a.)

8

transfer of ownership from Santoyo to the Bureau had already occurred.10 As this

Court has held:

[I]t is clear that a tax claim bureau must become trustee of

a property at the moment it concludes the upset sale, that

is, when the property is struck down, and legal title to the

tax delinquent property passes to the tax claim bureau, as

trustee, at that time, which is the most appropriate time for

that to happen because the owner’s right of redemption at

that time is extinguished.

Commonwealth v. Sprock, 795 A.2d 1100, 1102 (Pa. Cmwlth. 2002).

Moreover, as was the case in Sprock, this transfer occurs even in the

absence of a sale at an upset tax sale. In re: Balaji Invs., LLC., 148 A.3d 507, 512

(Pa. Cmwlth. 2016), appeal denied, 168 A.3d 1293 (Pa. 2017); Pacella, 10 A.3d at

428 n.8. Whatever rights and legal title Santoyo held in the Subject Home, therefore,

were transferred to the Bureau by operation of law after the 2012 upset tax sale.

Accordingly, we conclude that Brown’s action before the MDJ subsequent to that

sale was a nullity in that Santoyo was no longer the legal owner of the Subject Home

and, therefore, could not be deemed to have abandoned it as a matter of law. Two

cases also support our holding.

In Bankers Trust Co. v. Tax Claim Bureau of Delaware County, 723

A.2d 1092 (Pa. Cmwlth. 1999), after an unsuccessful upset tax sale but before a

successful judicial sale, Bankers Trust as the foreclosing creditor purchased the

subject property at a sheriff’s sale. In ruling that the trial court did not err in

dismissing Bankers Trust’s petition to set aside the judicial sale, we observed that

“the property was taken in by the county” after the unsuccessful upset tax sale. Id.

10

We are troubled by the MDJ’s consideration of the matter pursuant to the Manufactured

Home Act where Brown failed to name the Bureau as the trustee and legal owner of the Subject

Home.

9

at 1094. Accordingly, noting that the bureau provided proper notification to Bankers

Trust of the scheduled judicial sale, we concluded that any loss that the creditor

incurred as a result of the judicial sale was “a result of its own failure to take

reasonable steps to protect its interest in the Property.” Id. at 1095. In other words,

the intervening sheriff’s sale was rendered a nullity, in large part, due to the transfer

of the property to the bureau after the upset tax sale.

The second case is Sprock, wherein we considered the issue of whether

the Sprocks were responsible for failing to comply with an ordinance affecting the

maintenance of their former property following an unsuccessful upset tax sale.

Notwithstanding the fact that the deed remained in their names, we held that they

were not required to comply with the ordinance because the bureau had gained

control of the property as trustee subsequent to the upset tax sale. Sprock, 795 A.2d

at 1104. In other words, after the transfer of ownership to the bureau, the

municipality could not hold the Sprocks responsible under the ordinance.

Accordingly, once the Subject Home in the present case was exposed

at the upset tax sale and the Bureau assumed legal ownership under the Tax Sale

Law, Brown could not sue the former owner of that property under the Manufactured

Home Act and usurp the role of the Bureau as trustee and legal owner as established

under the Tax Sale Law. Having so concluded, we turn now to Brown’s second

issue concerning the nondivestiture of liens after the unsuccessful upset tax sale.

Brown maintains that the Bureau improperly attempted to divest claims

before a mandatory judicial sale that are protected by virtue of the nondivestiture of

liens provision found in Section 609 of the Tax Sale Law. Specifically, he maintains

that his rights and remedies set forth in the Manufactured Home Act, including any

10

claims for ground rent, are included in Section 609 and cannot be divested after

either an upset tax sale or a judicial sale. Section 609 provides:

Nondivestiture of liens

Every such sale shall convey title to the property

under and 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 become liable.

As the trial court concluded, however, because the upset tax sale did

not result in the actual sale of the Subject Home, it did not result in the divestiture

of any liens or claims. An “actual sale” is defined as follows: “[P]ayment of the full

amount of money agreed to be paid as the sale price by the successful bidder or

purchaser at upset sale under sections 605 through 609.” Section 102 of the Tax

Sale Law, 72 P.S. § 5860.102. It is unnecessary at this stage of the proceedings,

therefore, to address an allegedly improper divestiture. Similarly, any issue

concerning “ground rent” is not before us here.11 We turn now to Brown’s third

issue regarding the effect of the loss of an owner’s right of redemption under Section

501(c) of the Tax Sale Law on the nondivestiture provision found in Section 609.

Section 501 is entitled “discharge of tax claims” and subsection (c)

provides: “There shall be no redemption of any property after the actual sale

11

In 2012, our Supreme Court, inter alia, pondered the inclusion of ground rent with other

types of real estate listed in Section 201(a) of the General County Assessment Law, 72 P.S. § 5020-

201(a). It reiterated that “ground rent is considered an interest in land, and, hence, is a particular

form of real estate; thus, its inclusion with other types of real estate listed in Section 201(a) is

unremarkable.” Tech One Assocs. v. Bd. of Prop. Assessment, 53 A.3d 685, 698 n.25 (Pa. 2012).

Further, it contrasted lease payments, stating that they were a contractual obligation and not

specific kinds of real estate subject to taxation. Although Brown in the present case may be

improperly equating ground rent with the contractual lease payments that he charged Santoyo for

placing the manufactured home on the real estate, the proper construction of “ground rent” is not

before us at this time.

11

thereof.” 72 P.S. § 5860.501(c). Acknowledging that Section 501(c) eliminates an

owner’s right to redeem property after an actual sale, Brown maintains that the

provision provides no authority for removal of claims or liens preserved under the

nondivestiture provision found in Section 609. In that regard, he maintains that

Section 501 was improperly construed in the present case to provide that, subsequent

to an unsuccessful upset sale, there is no right of redemption and any action to

transfer the property or declare it abandoned constitutes a nullity. In addition, he

maintains that, because a sale occurs at the time of the upset auction, Section 609 is

not affected or conditioned upon an owner’s loss of redemption.

As previously noted, there was no actual sale of the Subject Home as

defined in Section 102 of the Tax Sale Law. Moreover, a judicial sale engenders all

of the attendant searches and due process that the General Assembly saw fit to

provide in the judicial sale provisions.12 Accordingly, whether or not the former

owner of the Subject Home, Santoyo, could redeem it after it became subject to the

process outlined in the Tax Sale Law, i.e., the upset tax sale, there has been no

divestiture of liens or claims attendant to or subject to the unsuccessful upset tax

sale.

Accordingly, we affirm.

_____________________________________

BONNIE BRIGANCE LEADBETTER,

Senior Judge

12

As noted, Section 610 of the Tax Sale Law provides that, upon the presentation of a petition

for judicial sale, “accompanied with searches showing the state of the record and the ownership of

the property and all tax and municipal claims, liens, mortgage, ground rents, charges and estates

against the same, the court shall grant a rule upon all parties thus shown to be interested to appear

and show cause why a decree should not be made that said property be sold, freed and cleared of

their respective tax and municipal claims, liens, mortgages, charges and estates, except separately

taxed ground rents.”

12

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jay R. Brown, :

Appellant :

:

v. : No. 754 C.D. 2017

:

Chester County Tax Claim :

Bureau and Chester County :

ORDER

AND NOW, this 29th day of January, 2018, the order of the Court of

Common Pleas of Chester County is hereby AFFIRMED.

_____________________________________

BONNIE BRIGANCE LEADBETTER,

Senior Judge