The City of Philadelphia recently announced a request for proposals to implement an online auction for the sale and assignment of some of the city’s delinquent real estate tax liens. The auction will allow third parties to bid on the tax liens, with the successful bidder assigned the lien from the city upon the purchaser’s payment at the conclusion of the auction. Title to the property against which the delinquent tax lien is sold will not be transferred. The third-party assignee would then pursue the collection of the delinquent taxes from the property owner.
A Commonwealth Court ruling earlier this month, in City of Philadelphia v. Manu, 2013 Pa. Commw. LEXIS 363, may have a significant effect on the City’s procedures in tax sales, and the success of owners and lienholders in setting aside or staying such sales if statutory requirements are not followed.
In January 2011, the City filed a petition seeking to sell a rental property owned by Agnes Manu free and clear of all encumbrances, pursuant to the Municipal Claims and Liens Act (the “Act”), 53 P.S. §7101, et seq. The City first alleged the amount of delinquent water and sewer rents was $0.00 and attached to its petition an “amended” claim of $657.54, plus interest and penalties for “City taxes”. In addition to the property owner and other tax lien holders, several mortgagees had an interest in the property. However, the show cause order that issued on the petition was only directed to the property owner. Further, service of the petition and rule was made only by posting on the property.