On Wednesday, June 20, 2018, Governor Wolf signed Senate Bill 851 into law as Act 38 of 2018 (“Act 38”). Act 38 amends the Real Estate Tax Sale Law, act of July 7, 1947 (P.L. 1368, No. 542) (“RETSL”) to, in large part, address a Pennsylvania Commonwealth Court decision, Commonwealth v. Sprock, 795 A.2d 1100 (Pa. Commw. Ct. 2002).
The Sprocks acquired a property in Central City Borough, Somerset County. After failing to pay the taxes, the Somerset County Tax Claim Bureau exposed the property at an Upset Tax Sale in the fall of 1987. When no bids were received, the Bureau simply held onto the property. When the Borough cited the Sprocks under the Borough’s property maintenance code, the Sprocks argued that the property was in the trusteeship of the Bureau, and therefore the Sprocks were not responsible for the citations. The Commonwealth Court determined that the Sprocks were not the “owners” of the property when the citations were issued. Instead, the Court held that if there are no bids received on a property at an Upset Tax Sale, the County Tax Claim Bureau thereafter holds such property as trustee. Quite obviously, this adds a wrinkle to any County Tax Claim Bureau’s Upset Tax Sale procedures.
The Amendment, however, clarifies that the Tax Claim Bureau is a trustee of the property only for the purposes “as may be necessary or implied in order to convey the property or otherwise further the purposes of [RETSL].” Instead, legal title to the property remains vested in the delinquent property owner until a deed is signed to transfer the title to the property, and that delinquent property owner remains liable for any property maintenance or nuisance remediation. Moreover, the Amendment provides that neither the County nor the Tax Claim Bureau shall be responsible for any maintenance or nuisance remediation of such properties unless the County purchases the same.
Also of note, the Amendment modifies the method by which a delinquent property owner can pay the delinquent taxes after the property was exposed at the Upset Tax Sale but before the property is exposed at the Judicial Tax Sale. The delinquent property owner must pay all delinquent taxes that have been returned to the Tax Claim Bureau, plus all costs, penalties, and interest due at the time the payment is made. No partial payments or payment plans may be accepted.