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“The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.”

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  • 1. “The Consequences of Conflicting Delinquent Property Tax Collection Laws in The Commonwealth of Pennsylvania.” By Gordon S. Rhoads For the Department of Political Science Arcadia University April 2007 © 2007 Gordon S. Rhoads
  • 2. Table Of Contents:Abstract… 3Literature Review… 4Taxing Districts Face Choices… 8PLTA and Fidelity Home Abstract, Inc v. East Stroudsburg Area School District… 11City of Allentown v. Richard J. Kauth and Lourdes Kauth… 15Portnoff Law Associates… 16A response to Portnoff Law Associates… 18“The Portnoff Process” and the Tax Claim Bureau Process… 19In the Wake of the PLTA v. East Stroudsburg Area School District Decision… 20The Best Interests of The Pennsylvania School Districts… 25Conclusion… 30Bibliography… 33Appendix… 35a) PLTA v. East Stroudsburg Area School District… 33-46b) Allentown v. Kauth… 46-50c) Memo from Adrienne Verdone, Esq., CLTP, PLTA President… 51d) PA Senate Bill no. 508 2/18/03 MCTLA amendment to May 16, 1923 (P.L.207, No.153)… 52-54e) Local taxes are the majority of local school funding chart… 55f) Local taxes by source chart… 56 2
  • 3. Abstract: Taxes and fees assessed by various government entities, including school districts,are crucial to the operation and delivery of goods and services, primarily publiceducation, to the population. This report will establish that the collection of taxes and feesby private entities is a healthy thing for the taxing entities in the Commonwealth.Pennsylvania students may face a significant decrease in resources because of delinquenttaxes and a current legal conflict. This report sheds light on the nature of choices thatgovernment entities face when competing for essential revenue, as well as point out thejudicial and legislative history involved. Research compiled over two years and opinionsof four attorneys, who are authorities on this conflict, present their opinion throughout thethesis. A resolution is necessary for the fiscal health of the Pennsylvania School Districtsand this explains why. . 3
  • 4. Everyone who owns real estate must pay property taxes, unless on a rareoccasion, the property is purchased with a stipulated tax abatement. Taxes arerequired to provide services to all residents of a particular taxing district, includingthe property owner who pays his or her tax bill. The services that the tax bill supportsinclude funding school operating expenses, clinics, libraries, public hospitals, roadmaintenance, playgrounds, parks, pensions, and law enforcement just to name a few.As long as taxes have been levied there have been instances of late or completelydelinquent payments of the bill. What happens when money for these services isreduced because of the non-payment of taxes? Legal remedies are in place in theCommonwealth of Pennsylvania to ensure that taxing districts, such as townships,school districts, municipalities, cities, and boroughs, receive their funds in a timelymanner and maintain revenue to continue providing necessary services.Literature Review: Thomas Paine wrote in the Rights of Man that, “On the subject of supplying theTreasury by new taxes the Assembly declined taking the matter on themselves,concurring in the opinion that they had not authority.”1 Thomas Paine responded to Mr.Edmund Burke with a belief that liberty was the responsibility of all in a society.Published in 1791, The Rights of Man has been considered a political masterpiece. It wasnot the authority of the Assembly to decide how to supply the Treasury, rather, it was thepeople. In 1791 America had very little global influence. Yes, this nation had won itsbattle for sovereignty, but only two years after the Bill of Rights was adopted, the Nation1 Eckler: Thomas Paine, p. 80 4
  • 5. had a long way to go. In a great society, a democracy for example, who does theindividual have a responsibility to? Some argue that each of us has a responsibility to ournation and liberty; others may argue that responsibility lies in self-preservation. Taxes are a fundamental tool for maintaining society and all of the activities that agovernment must undertake. Taxes, in one sense, are an investment in the future. Whenone commits funds to the preservation of society on a whole, then that person commits tothe preservation of himself or herself, as they are a member of their society. When one isa participant in society, then it is the responsibility of that person to preserve that society.On a large scale, it becomes the responsibility of everyone to perpetuate taxes, or a webof support, for the continuation of liberty, security, and services. The argument over the role of government may be widely argued, however it isassumed that the fundamental roles of government include establishing law & order,providing public services (however limited) and at least some level of protection. Agovernment cannot exist without the support of the citizenry. Whether the government isimposed or elected, it cannot survive without the labor and finances of the people. Paine elaborated on taxes writing in The Rights of Man that, “the funding systemis not money; neither is it properly speaking, credit. It in effort creates upon paper thesum which it appears to borrow, and lays on a tax to interest, and sends the annuity tomarket, to be sold for paper already in circulation. If any credit is given, it is to thedisposition of the people to pay the tax, and not to the government, which lays it on.When this disposition expires, what is supposed to be the credit of Government expireswith it.”22 Eckler: Thomas Paine, p. 119 5
  • 6. Essentially the government is afforded by the citizenry, the right to choose how toextend its finances. For the most part, the government chooses to finance services thatadvance the will of the people. In some circumstances, the government may choose tofund any number of programs or activities that are not the will of the people. When thisoccurs, it is the theory of Locke that the government looses the credibility that thecitizens extend to it. That is, if the government is not extending finances advancing thewill of the people, or finance with the intent to advance the future prosperity of thepeople, then the government will then loose their own credibility. This means that thegovernment always has an expired approval when the interest of the people is notmaintained, and that the people have the right to choose another government. Taxes are at the heart of this approval. The people’s support comes from thecorrect and approved levying of taxes. The goods and services provided are for thebenefit of all, or so it is assumed. The citizens will always expect that services renderedto their ‘neighbor’ will also be an option for themselves. Taxes are to be a shared burden,as well as a shared benefit. When participation in this foundation of support is diminishedby a voluntary withholding of tax commitment, then society itself is threatened. John Simmon’s assessment of Lockean theory quotes Locke’s writing, “Nosociety can, of course, be a scheme of cooperation which men enter voluntarily in a literalsense…. Yet a society satisfying [hypothetical contractarian demands] comes as close asa society can to being a voluntary scheme, for it meets the principals that free and equalpersons would assent to under circumstances that are fair. In this sense its members areautonomous and the obligations they recognize self-imposed.”33 Morris, p. 133 6
  • 7. This means that a society operates with the cooperation of all of the citizenry.What happens when citizens choose to dissent and choose to separate themselves fromthe obligations of society? Without the dynamics of interaction and cooperation, societywould cease to exist. The implications of being a member of society include aresponsibility to the other members of society. When one participates in the interplay ofsociety and daily life, then one is obligated to his fellow man. What does this mean? InLockean theory, the undertone is a responsibility to each other. Living in society is acommitment and obligation in itself. Jack Fruchtman compared Lock and Paine by pointing out the theories of propertyownership and their implications on poverty. Fruchtman wrote, “Paine approached the problem of poor people by formulating a legal fiction: those who owned property owned a debt to the poor. He thought of the owners of property as not really owners, but lessees. They occupied the land perhaps through inheritance, perhaps through sale, perhaps through thievery. In any case, there was no original deed, because the first person who took ownership had no “rights” to the property. He simply claimed it and seized it. Paine genuinely believed that poverty was the outcome of civilization. There was no such thing as poverty in a state of nature. In that pre-political condition, before civil society came into being, a person’s life might have been threatened by wild animals, or even by other men. But he was not poor. He had plenty from the earth, and all he needed to do was use it. This, too, differed from Locke, who had presumed that even in a state of nature, a person might take control of a certain amount of property once he mixed his labor with it, that is, cultivated it and made things grow on it.”4 A society is a place for the interaction of everyone. In human society, each personhas a role. What is the role of a property owner? According to Paine, property belongedto everyone. And to Locke, a property could be something claimed, especially if thatproperty was developed for any particular use. These theories affirm that ownership andsociety are shared phenomenon. Those that “own” property have an obligation to those4 Fruchtman, p. 360 7
  • 8. who do not own property. Those who own property also have an obligation to others whodo own property. The obligation includes an affirmation that society includes theproperty owner and relies on the property owner for a certain level of support. Propertyownership is an accomplishment of societal participation that announces wealth and orsuccess. Paine’s theory of property ownership and owning a debt to the poor is acorrelation to property ownership and taxation. There is a debt owed to society as awhole. That debt will ensure the survival of society as well as the survival ofproperty owners to come. The theory of taxation is simple. As Paine elaborated on“ownership” there really is no single “owner” as everyone has a share of the space onthis planet. The personal use of that space is something precious, as well as a debtowed to all those who do not have the privilege to that land.Taxing Districts Face Choices: In Pennsylvania, the taxing districts have choices when it comes to selectingthe process by which they will collect delinquent taxes. Two specific references willbe brought up throughout this thesis that are important to understand. The first is thePennsylvania Municipal Claims and Tax Liens Act of 1923 or “MCTLA.” Thesecond is the Pennsylvania Real Estate Tax Sale Law Act of 1947 or “RETSL.” TheMCTLA provides provisions that allow for a taxing district to collect delinquenttaxes, defined as all fees plus cost of collection through the use of a third party, andultimately if no payment is made within a year, the taxing district has the right toproceed to liquidate the property at a sheriff sale. 8
  • 9. The RETSL enables a County Tax Claim Bureau to proceed to an upset sale afterone year has passed on a delinquent tax claim. However, this process may take up tothree years, as it provides delaying remedies for delinquent property owners. Typically, taxes are assessed based on the value of a given property. Thecounty assessor has the role of declaring a value of a given property, at which pointan annual tax bill is assessed by multiplying the taxing authority’s millage rate,which is generally one tenth of one percent by the assessed value. We will furtherdiscover the problems that taxing by assessed property values pose to services suchas education later. Once the tax bill has become delinquent, which is at the end of the calendaryear of the dated original tax bill, under the RETSL, the tax record must be turnedover to the County Tax Claim Bureau. At the point of receiving the claims at the TaxClaim Bureau, a penalty fee is added to the amount of the tax and a tax lien is filedagainst the property. Edward Rupert, CPE, Butler County wrote about the RETSLreporting, “The Real Estate Tax Sale law starting in Title 72 §5860.101 is specific about the due process of selling a person’s home or property for the nonpayment of tax due. The main thrust of the Tax Sale Law is to make sure the owner or reputed owner has actual notice of the pending sale… The result of the PA Real Estate Tax Sale Law (RETSL) was to consolidate all delinquent real estate tax claims into one agency as a convenience to local officials, property owners, prospective purchasers, and title searchers. This consolidation greatly helps to eliminate the accumulation of delinquent taxes and the revival of liens permitted by prior lien laws. This law replaces the county treasurers’ and city treasurers’ sale by a single procedure under the Tax Claim Bureau. The RETSL provides a means of conveying [a] better title to a purchaser at tax sale. The RETSL was designed to benefit local governments in the accelerated collection of delinquent real estate taxes without causing undue hardship on the delinquent property owner. 9
  • 10. To the extent that the RETSL reduces the amount of delinquent real estate taxes as a percentage of the market value of taxable property, it increases the total tax yield and also serves to reduce the share of total taxes born by those who promptly pay their taxes.5 If a taxing district chooses to use the MCTLA to collect, they may hire a thirdparty private collection agency or firm to hasten the process. In either case, using theRETSL or MCTLA, the tax is delinquent and owed to the taxing authority. Recently,a debate has arisen contesting the methods by which taxing authorities may collecttaxes. The RETSL requires that all delinquent claims go to the Tax Claim Bureau,and the MCTLA allows for a third party to collect delinquent taxes moreexpediently. Several problems arise in the Commonwealth of Pennsylvania becauseof the concurrence of the RETSL and MCTLA. First, in order for a third party to collect the delinquent taxes under theMCTLA, the third party must have access to the documents that record the reportedowner of the property, amount of delinquent tax, and property information toproceed. This is the first conflict of the concurrence of the MCTLA and RETSL. TheRETSL requires that all documents pertaining to the delinquency statistics areforwarded to the Tax Claim Bureau, but the MCTLA makes no mention of whoholds claim to the delinquent tax records. Second, the Tax Claim Bureau isresponsible for providing certifications that the properties are either free-and-clear ofliens, or if they are in a status of delinquency. With the presence of a third partycollector, such information is not made available to the Tax Claim Bureaus andinformation pertaining to property status is in the hands of the third party collector.To understand the legal conflict one may compare the collection processes of the Tax5 Edward Rupert, AAP Journal Assessors Association of Pennsylvania, Issue 5 Volume 2 spring 2004 10
  • 11. Claim Bureau using the RETSL and a third party collector named Portnoff LawAssociates, Ltd., which uses the process outlined in the MCTLA.PLTA and Fidelity Home Abstract, Inc v. East Stroudsburg Area School District: This case was argued on September 13, 2006 in the Commonwealth Court ofPennsylvania Court of Common Pleas of Monroe County. It is necessary to cite thefacts of the case based upon the testimony elicited at the December 7, 2005 hearing: The Facts of this case are as follows: Briefly since 2003 the Tax Collectors, following the instructions of the School Districts, have not made returns of delinquent school taxes for tax years 2002, 2003 and 2004 to the Monroe County Tax Claim Bureau . . . Instead, the School Districts have contracted with Portnoff Law Associates, Ltd (hereinafter referred to as “Portnoff”), to act as their solicitor for purposes of collecting delinquent taxes using the provisions of the Municipal Claims and Tax Lien Act. As a result, the Bureau has no records of paid or delinquent school taxes for properties located within the two School Districts for the tax years 2002, 2003 and 2004. The School Districts are able to provide information regarding delinquent school tax records to the general public upon request; however, the information is not readily available for viewing by the general public, nor is the information updated after the delinquent taxes are forwarded to Portnoff for collection. Consequently, title searchers, title insurance companies, mortgage companies, banks, attorneys and the general public cannot obtain this information from the Bureau or the School Districts; instead, they must contact Portnoff. Anyone requesting information from Portnoff can receive a verbal report on the status of such taxes free of charge; however, if a written report is requested, the cost is $25.00 to $50.00 depending on whether it is an expedited request. When requesting a written report from Portnoff, it takes a minimum of five business days to receive the information for a regular request, and it takes two business days to receive the information on an expedited request. All responses to requests are sent by fax. Although identified as certifications, the reports prepared by Portnoff are not signed certifications. This same information, if it were available at the Bureau, could be viewed by the requester either in printed form by looking at the hard copy file or by using the computer terminals that are available for public use free of charge. If a tax lien certificate is requested from the Bureau, the requester would receive an “official” certification of the status of the 11
  • 12. taxes, whether paid or unpaid, on a specific parcel of real estate within a matter of minutes. The cost of this official tax lien certificate is $10.00. Real estate attorneys and title agents who handle real estate matters regarding properties located in the School Districts have suffered monetary losses due to the lack of or inaccuracy of information regarding the status of the school taxes. They have also experienced delays in receiving information from tax records which previously had been instantly available at the Bureau. Confusion has been created for delinquent taxpayers over who they should make delinquent tax payments to – the Bureau or Portnoff. Taxpayers have also experienced problems obtaining credit because the tax liens filed by Portnoff in the Monroe County Prothonotary’s Office have not been satisfied even though they have been paid.6 From the facts of this case one can see that this is not a debate over theexistence of third party tax collection. This is a complex conflict about who hasclaim to delinquent tax records. The Pennsylvania Land Title Association asserts thatbecause Portnoff Law Associates is collecting delinquent taxes for East StroudsburgArea School District, there is an increased rate of confusion and delay in thereporting of public information, as well as an increased cost of operation for the realestate industry. In an interview with Sandy Dixon, Esq., the Chairman of the PennsylvaniaLand Title Association’s Legislative and Judicial Committee, he stated that, “PLTAv. East Stroudsburg is essentially a business issue. My role in the case was to protectthose who certify sales against receiving false or inaccurate information caused bythe transfer of delinquent taxes from the East Stroudsburg School District to PortnoffLaw Associates instead of to the Monroe County Tax Claim Bureau. Every taxingdistrict can turn over claims to a tax bureau or can turn over [the delinquent claims]to a private attorney or agency for collection. There is a legal process. The Real6 PLTA v. East Stroudsburg Area School District No. 226 C.D. 2006 12
  • 13. Estate Tax Sale Law states that an upset tax sale must be held, then a judicial sale, apublic sale, and eventually a repository sale. Portnoff will proceed directly to asheriff sale. The RETSL gives the delinquent owner more time to makearrangements or ultimately pay. The law also states that the information must beturned over to the Tax Claim Bureau.”7 PLTA v. East Stroudsburg Area School District was brought by thePennsylvania Land Title Association to argue that they believed that the RETSLgave the Tax Claim Bureau the right to all claims. Ensuring that the Tax ClaimBureau has all of the tax record is to the advantage of title searchers. For titlesearchers, winning the case disregards the best interests of students and taxingdistricts dependent on the tax revenue, rather furthers their interest in making theirbusinesses operate faster and at a lower cost. The case does not answer the question,which law applies to the taxing districts? If the issue truly is about availability ofpublic information, then the RETSL and MCTLA cannot both have application in theCommonwealth. The Case mentions the City of Allentown v. Kauth (2005) notingthe Court in that case held that, “the two statutes are very similar and operateconcurrently with one another…” essentially agreeing with the decision yet choosingto pick and choose sections of both the MCTLA an RETSL for general application.Again, the concurrent application of these statutes does not work. Attorney Jane Roach is an elected member of the Board of Directors of thePennsylvania Bar Institute and served as the attorney for Pennsylvania Land TitleAssociation in the case PLTA v. East Stroudsburg Area School District. Ms. Roachelaborated in interview that, “The Tax Claim Bureaus are slower to collect than7 Sandy Dixon Esq., 3/28/07 13
  • 14. private collectors, but there are sound reasons for a delay in the sale of someone’sproperty. Tax sales take longer because it is sound law.” Ms. Roach talked about how she felt about the role of a private collector fordelinquent taxes and she stated, “The Pennsylvania Land Title Association says thatthere is nothing wrong with private collection.” Roach believes that privatecollection is not necessarily as effective as the Tax Claim Bureau and continued,saying that, “It’s absolutely of no interest to Fidelity Abstract or PLTA whether [ataxing district] hires a private collector. But, we question the availability of publicinformation when Portnoff Law Associates is contracted. To collect 4% of the taxes[Portnoff] holds 100% of the record. They charge $25 for a title search of theserecords, and property owners have paid Portnoff Law Associates then receivednotices of a tax sale.” Ms. Roach believes that the confusion has been especiallydifficult for senior citizens. She said, “Some seniors didn’t realize that for someyears they had to pay the Tax Claim Bureau and other years they were required topay Portnoff Law Associates. Because of this confusion, and believing that theirtaxes were paid, some of their homes went to tax sale.” Ms. Roach explained the crux of the situation saying, “Title companies aremaking more mistakes because Portnoff Law Associates and the Tax Claim Bureausare holding records for inconsistent years. For example, when Portnoff LawAssociates started to collect, they told school districts to pass on their records toPortnoff. That is against the law. According to the law, all records must go to the TaxClaim Bureau. The Tax Claim Bureau did not object. For several years [the records]were stored at the school district and Portnoff Law Associates took files as needed. 14
  • 15. The problem is that Portnoff Law Associates only needs 4% of the tax records buthas all of the records, causing an extra search for records by contacting Portnoff LawAssociates.”8City of Allentown v. Richard J. Kauth and Lourdes Kauth: On May 12th 2005, the Court of Common Pleas of Lehigh County decidedCity of Allentown v. Kauth taking care to note that, “The County argues that this language expresses an intent by the legislature that taxing districts coordinate their tax collection efforts through county tax claim bureaus. Those taxing districts stand to lose the protection afforded by Section 312 [of the RETSL] if municipalities such as the City may proceed with free and clear judicial sale under the MCTLA. Although the County acknowledges that the RETSL did not expressly repeal any specific provisions of the MCTLA, it contends that the operative provisions of the two statutes are irreconcilable and that the RETSL, which was enacted later in time, impliedly repealed the MCTLA…”9 The reality of the situation is that the RETSL was simply an alternative to theMCTLA. Simply because the RETSL was enacted after the MCTLA, that does notmean it repeals the MCTLA. It would seem that before PLTA v. East Stroudsburg,this case was the scheme of the Lehigh County Tax Claim Bureau to return taxclaims to the Bureau. “As the trial court aptly noted, the MCTLA and RETSL are not inconsistent with one another; rather, they permit, through strikingly similar and parallel mechanisms, a taxing authority to expose a delinquent property for an upset sale… Whether the judicial sale is affected under the MCTLA or the RETSL the intent of the legislature is the same: to return real property to productive use under new ownership.”108 Jane Roach, Esq. 3/30/079 City of Allentown V Kauth No. 2060 C.D. 2004 No. 2061 C.D. 200510 ibid 15
  • 16. This court rightly found that the “main thrust” of both the MCTLA andRETSL is not who collects the delinquent taxes or how, rather that the delinquent taxis legally collected, restoring the property to a source of revenue once again. “We hold that the two statutes are very similar and operate concurrently with one another, due to the fact that the RETSL establishes an alternative for the collection of delinquent tax claims, but not a mandatory alternative. The County’s argument would require us to find, in derogation of the express language used by the legislature, that RETSL is mandatory. We find no merit to the County’s claim that any or all of the provisions of the MCTLA have been impliedly repealed by the RETSL.”11Portnoff Law Associates: Michelle Portnoff, President of Portnoff Law Associates stated in aninterview on April 9th, 2007 that, “I think that the biggest obstacle that Portnoff LawAssociates faces is the Commonwealth Court decision in November [deciding thatthe] RETSL and MCTLA can take place concurrently. It doesn’t make any sense.You can’t have two collectors collecting the same debt. I think that in a conflict incourt, a legislative clarification is needed. Under Pennsylvania law, the legislaturehas the right to basically remedy legislation when it’s interpreted differently from itsoriginal intent.”12 What does Pennsylvania Land Title Association v. East Stroudsburg AreaSchool District mean for Portnoff Law Associates? Portnoff Law Associates is a firmthat prides itself in the fact that it can collect more efficiently than the Tax ClaimBureaus as well as with more concern for the individual taxpayer. In their initialcommunication to a taxing district they solicit that:11 City of Allentown V Kauth No. 2060 C.D. 2004 No. 2061 C.D. 200512 Michelle Portnoff Esq., 4/9/07 16
  • 17. “Portnoff Law Associates offers the only viable long-term solution to your delinquent real estate tax problem. With nearly twenty years experience collecting delinquent real estate taxes and municipal user fees, we can collect your delinquent real estate taxes much more efficiently and fairly than any other service in the Commonwealth of Pennsylvania. Our firm affords the highest rate of return in the Commonwealth, and our clients consistently experience reduced delinquency rates in the years subsequent to the implementation of our collection process. Portnoff Law Associates is not a collection agency, and it does not operate like one. Unlike the Tax Claim Bureau, Xspand or any other collection agency, Portnoff Law Associates operates under legislation that allows the fair and reasonable costs of collection to be passed through to delinquent taxpayers. Our clients enjoy the unique advantage of maintaining total control over the entire collection process. The process utilized by our firm offers your taxing district the following benefits. We urge you to refer to this table when comparing various delinquent tax collection services: The Portnoff Process ™ Amounts Remitted 100% of principal, penalties, and interest to date of collection Length of collection process Less than 1 year 95% + of principal, penalties and interest Percentage of claims collected to date of collectionCommission charged to taxing district 0% Remittance Weekly remittance of 100% of principal, penalties, and interest to date of collection Reduced delinquency rates in Yes subsequent years Hardship Program Yes The efforts of our firm are directed toward habitually delinquent taxpayers who have the means to pay their taxes timely, but choose not to do so. We believe that it is unfair for a taxing district to require its good citizens who timely pay their taxes to subsidize those property owners who refuse to pay their taxes year after year. We urge you to review the track records of the organizations you wish to consider for the task of delinquent tax collection. Some of the companies that purchase delinquencies are known to lack compassion when dealing with delinquent property owners. Because we are a professional law firm that operates on behalf of its clients, we offer a unique process that protects the infirm, the elderly, the sick, the disabled, and those delinquent taxpayers on limited incomes. We are proud to administer a Hardship Program, the parameters of which are set by the taxing district, which 17
  • 18. ensures that those disadvantaged property owners remain safe from the treat of losing their homes or accruing any legal fees.”13A Response to Portnoff Law Associates: Steve Levin of the Pittsburgh Post-Gazette wrote an article describing theburden a bill from Portnoff Law Associates placed on a couple who bought their firsthome in McKeesport Pennsylvania. “The property had belonged to Welchs father, and there was an outstanding tax debt of $1,549.82 owed to the McKeesport Area School District. The couple sent a check for $1,600.05 to the company that acted as their closing agent to forward payment to Portnoff Law Associates, a Wynnewood, Pa., collection firm. But the settlement agency delayed sending the check, and by the time it was received, Portnoff had added a $150 fee to the bill. Now, instead of being free and clear homeowners, Gregory and Welch still owed $99.77. Had they paid it then, or forced the settlement agency to pay it, their problems would be over. But they didnt do the former and a two-year statute of limitations prevents them from doing the latter. Four years later, the couple owes Portnoff more than $1,700. The original $99.77 bill rose as high as $1,089.04 this January before the couple managed a $500 payment.”14 Some have debated the very existence of a third party collector. Is it the roleof anyone else, other than the government, to impose a function of the government?One can equate the existence of Portnoff Law associates to any privatized entity thatserves the public as the government otherwise would if it had the resources. Privateprisons, and security companies fill a void and provide a service more cheaply thanthe government, and they operate within the auspices of the government, just asPortnoff has been hired to collect delinquent taxes for various taxing districts.“The Portnoff Process” and the Tax Claim Bureau Process:13 Sample letter signed by Alan B. Portnoff Esq., acquired from firm employee orientation, notdated14 Steve Levin: A Dream Foreclosed: Small Mistakes, Giant Consequences, Pittsburgh Post-Gazette, 6/7/2004 18
  • 19. In an interview with Michelle Portnoff she was asked, “What makes PLAbetter than the Tax Claim Bureau in the function of collecting delinquent taxes?” Sheresponded, “The RETSL mandates 2 ½ years to collect. For example, if the countyTax Claim Bureau collected 2006, then a tax sale wouldn’t take place until 2009”“Under the MCTLA you may give 30 days notice before proceeding… Generally 90percent of taxes and fees are usually paid on time or are current. For the masspopulation, there is no change when Portnoff Law Associates is the collector ofdelinquent taxes and fees. The county Tax Claim Bureau may use the MCTLA tocollect [delinquent taxes] but they can’t get their act together to collect as efficientlyas the MCTLA allows… The public sector is not state of the art [enough] for the useof a MCTLA process.” One benefit of contracting Portnoff over forwarding claims to the Tax ClaimBureau is Portnoff’s ability to swiftly collect delinquent taxes for school districts andtaxing districts as well as return the full amount without withholding a percentage ofthe claim, as the Tax Claim Bureau withholds 5% of the collected amount. Whenasked to elaborate on why the Pennsylvania Land Title Association has an interest inwhether or not Portnoff Law Associates collects the delinquent taxes, Portnoff said,“Most clerks aren’t driving to the county Tax Claim Bureau or to a 3rd party, most[title certification requests are] done by email or fax.” 15 Title insurance companies are increasingly impatient to allow for areasonable return time for their requests. Portnoff provides all requests for tax payoffamounts via email or fax within 5 days. They have an entire department dedicated tothe return of information requested via written communication, email, or fax.15 Michelle Portnoff Esq., 4/9/07 19
  • 20. Attorney Sandy Dixon of Ticor Title Insurance Company and Chairman ofthe Pennsylvania Land Title Association’s Legislative and Judicial Committee said,“We have no objection to private collection but our whole issue is the right to getrecords easily, inexpensively, and locally. The role of title insurance companies is toensure that the property is free of taxes, and this case is to ensure that role.”16 Michelle Portnoff responded to the question asking her to define her solutionto Pennsylvania Land Title Association’s claim that the records should be returned tothe Tax Claim Bureau. Her response was, “I think that the way to make informationmost accessible is to make it available electronically… The best result allows accessby the public for up to the minute records and a 3rd party can provide that servicebest.”17In the Wake of the PLTA v. East Stroudsburg Area School District Decision: The opinion of the court on February 2, 2006 was not in the favor of PortnoffLaw Associates. On February 2, 2006, the trial court granted the motion for peremptory judgment and issued a writ of mandamus: 1) that the School Districts and tax collectors are to make future annual returns to the Bureau; 2) that the School Districts are to provide to the Bureau all of the School Districts’ books and records for the tax years 2002, 2003, and 2004; 3) that the School Districts also are to provide a detailed disclosure to the Bureau of the status of all real estate taxes for the applicable tax years; 4) that the School Districts and tax collectors are to make payments for the delinquent taxes shown on the returns only to the Bureau; 5) that the School Districts are to relinquish all future payments for delinquent taxes to the Bureau and to provide to the Bureau detailed property descriptions for which the payments were made; 6) that the School Districts are to file a satisfaction of liens for payments received on municipal liens; and 7) that the School Districts are to16 Sandy Dixon Esq., 3/28/200717 Michelle Portnoff Esq., 4/9/07 20
  • 21. provide full tax lien payoff information in writing, at no charge, within five business days of any written request.18 The Trial Court decision ordered that essentially all delinquent claims are tobe forwarded to the Tax Claim Bureau. Also ordered was a return of all claims to thetax claim bureau for the years 2002-2004, years that Portnoff Law Associates isactively collecting. Also, the Court ordered that the School Districts are responsiblefor providing lien information in writing at no charge to anyone who makes a requestfor that information in writing. This order is supposed to make lien payoff information more accessible totitle insurance companies, however the implication of this decision will create chaosfor the taxpayers, the school district officials, Portnoff Law Associates, andeventually for the Tax Claim Bureau. This case is on appeal, and both PLTA andPortnoff Law Associates are pursuing a legislative remedy to the problem. Problemsarising from this order would overwhelm school districts and the Tax Claim Bureauin labor and costs. Also consider the taxpayer who may have been on an establishedpayment plan with Portnoff Law Associates, who now could be forced to adapt to thechange. East Stroudsburg Area School District would also have to face and acceptanother decrease in the flow of revenue, as Portnoff has proven to be faster atcollecting the debts, legally using the MCTLA, than the Tax Claim Bureau using theRETSL. Using the MCTLA instead of the RETSL was the argument that EastStroudsburg Area School District and Portnoff Law Associates used to justify their18 PLTA V. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/2006 21
  • 22. claim of retaining the tax return documents. But the RETSL stipulates in Section201(a), 72 P.S. § 5860.201(a) that: In lieu of or in addition to creating a bureau, counties are authorized to provide by ordinance for the appointment and compensation of such agents, clerks, collectors and other assistants and employees, either under existing departments, in private sector entities or otherwise as may be deemed necessary, for the collection and distribution of taxes under this act. Any alternative collection method shall be subject to all of the notices, time frames, enumerated fees and protections for the property owners in this act.19 Essentially this stipulates that any party that collects delinquent taxes otherthan the Tax Claim Bureau is required to collect taxes enumerated by the RETSL.The challenge that Portnoff Law Associates and the school districts that contractPortnoff face is the stipulation in the RETSL requires Portnoff and the schooldistricts to turn claims over to the Tax Claim Bureau. The Court decided that theRETSL doesn’t necessarily override the MCTLA, rather they are to workconcurrently. The Court indicates that, again, the issue is not whether or not Portnoff or anythird party can collect delinquent tax claims, it’s whether or not the third party mayuse the records for their own use, and how they should proceed to collect. TheMCTLA allows for the filing of liens with the Prothonotary, speeding up the processof collection if the delinquent fails to make payment, as well as creating a very realand near-future consequence for avoiding payment of delinquent taxes. But how canPortnoff Law Associates Collect more effectively than the Tax Claim Bureau if theyare forced to operate like the Tax Claim Bureau under the auspices of the RETSL? It shall be the duty of each receiver or collector of any county, city, borough, town, township, school district or institution district taxes to make a19 RETSL, Section 201(a), 72 P.S. § 5860.201(a) 22
  • 23. return to the bureau on or before the last day of April of each year, but no earlier than the first day of January of that year. The return shall be type written on a form provided by or acceptable to the county and shall include a list of all properties against which taxes were levied, the whole or any part of which were due and payable in the calendar year immediately preceding and which remain unpaid, giving the description of each such property as it appears in the tax duplicate, and the name and address of the owner as it appears in the tax duplicate, together with the amount of such unpaid taxes, penalties and interest due to but not including the first day of the month following the return.20 The Court also decided that the argument that Portnoff and the SchoolDistricts made in their defense was not valid. The School Districts asserted that: The Trial Court cannot circumvent the School Districts’ choice to proceed under the MCTLA by requiring the Tax Collectors to make a return to the Tax Claim Bureau under the RETSL on behalf of the School Districts. Section 5971t of the Local Tax Collection Law specifically prohibits a tax collector from making a return to the tax claim bureau if a taxing district advises that delinquent taxes will be collected by filing liens with the Prothonotary under the MCTLA. 72 P.S. § 5971t (“no tax collector shall make any return of taxes providing this act, if the taxing authorities shall notify such tax collectors in writing that returns shall not be made, but that delinquent taxes are to be collected by the filing of liens in the office of the prothonotary.”). The School Districts have given written notice to the tax collectors that their delinquent taxes will be collected by their Collection Solicitor under the MCLA. (R. 302a-303a). Therefore, the tax collectors are statutorily barred from making returns to the Tax Claim Bureau, further demonstrating that filing returns with the RETSL is not a mandatory requirement.”21 This demonstrates the School Districts belief that the RETSL and MCTLAcannot be administered concurrently. As Michelle Portnoff stated, “You can’t havetwo collectors collecting the same debt.” (Michelle Portnoff Esq., 4/9/07) The Court decided that the School District’s argument contained errors thatmay or may not have been intentional. The Court found that the reasoning was20 RETSL, Section 201(a), 72 P.S. § 5860.201(a)21 PLTA V. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/2006 23
  • 24. flawed and rebutted the School Districts defense of the MCTLA collection practicesalready in place by documenting in the Decision, “We have reviewed the provisions of the MCTLA and find no provision that repeals § 5860.306 requiring receivers, i.e. taxing districts, or tax collectors to make returns to the tax claim bureau. Thus, there is no conflict between the two statutes regarding the requirement for making returns of delinquent taxes to the tax claim bureau…22 The Court failed to recognize the fundamental differences of Portnoff LawAssociates and the Tax Claim Bureau. The Court believes that the Tax Claim Bureauuses the RETSL which is more expedient and beneficial to not only the schooldistricts, but to the county as well as the title insurance companies. But what isn’tdiscussed in the case is the burden of delinquent taxes to the school districtsthemselves. The only thing highlighted is the burden to the Real Estate industry, andthe additional cost incurred by obtaining a record search through Portnoff LawAssociates. The Court continued in its rebuttal to the School District argument that theyare not required to turn over records to the Tax Claim Bureau, “Furthermore, Section 5860.201(a) of the RETSL gives tax claim bureaus the authority to use other methods of collection, including the MCTLA, while at the same time requiring compliance with the provisions of the RETSL. Similarly, the 2004 amendment to the MCTLA also gave tax claim bureaus authority to use the procedures of that act to collect delinquent real estate taxes in addition to the procedures set forth in the RETSL.”23 The importance of having access to the public records is evidence as thetestimonial accounts of problems that have been encountered by real estate attorneys,title searchers, and the general public. In this case, the court decided that the22 PLTA V. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/200623 ibid 24
  • 25. convenience to the real estate industry outweighed the interest of the school districts.Michelle Portnoff commented that, “I think that the title insurance industry will beopen to working something out to solve this problem. You have competing needsand the vast majority of taxpayers pay on time, but the entire real estate industry isnot in disarray over people who don’t pay their taxes.”24The Best Interests of The Pennsylvania School Districts: It is a fact that the majority of revenue collected by the Commonwealth ofPennsylvania school districts to sustain their daily operating expenses is collectedfrom the local tax base. According to the Pennsylvania Department of Education,local taxes represent 93.9 percent of the revenue for school districts! Dawn SchmidtEsq., former Director of Portnoff Law Associates and the current DeputyPhiladelphia Tax Solicitor responded to that statistic saying, “That is a reallyimportant statistic, because that really differs from state to state. There are manyimpacts of relying on local taxes for school operating expenses. First and foremost,everyone benefits from quality education in society. Nobody says that children aregetting too much. I am idealist and ask, what more can we do for the students?”When asked if schools should diversify their sources of revenue, Schmidt replied,“Again, I am an idealist. I believe that school districts should have a lot of powerbased on their obligations. Unless we give them the power to even make the choiceto diversify, then how will they know whether or not a change in the currentpractices will improve cash flow? It’s not as if I am saying that the school districtsshould have sovereign power, because voters ultimately have the power. If we don’t24 Michelle Portnoff, 4/9/2007 25
  • 26. like the decisions the school board members are making, then vote them out!Operating school districts is not a one-size-fits-all scenario.25 When a school district faces a funding crisis, or suddenly faces an increase incosts, then it is the responsibility of the school boards to formulate solutions. Ideally,school districts would face challenges without a debt burden. Unfortunately, in somesituations, school districts may face an overwhelming debt load from previous years.What happens when a school district faces a fiscal challenge without the funds toremedy the situation? Either the school district will have to cut costs and divertspending, increase taxes, or go into debt. Dawn Schmidt said, “It’s really importantto know that when a school district faces a crisis, they are empowered to makechoices. Sometimes the choices are not ideal, like selling delinquent tax claims for aloss, but sometimes a choice that isn’t ideal may be the only realistic option to solvean immediate challenge. For example, if a school district is owed one million dollarsin delinquent claims, selling those claims for eight hundred thousand dollars may bebetter than waiting years to recover the full amount, especially if a school is facingsevere budget shortcomings.”26 It’s been established by the Pennsylvania Legislature that school districts inthe commonwealth need to be afforded flexibility and choices. The RETSL is simplyan addition to the choices that the school districts have. The RETSL in no wayrepeals the MCTLA, because if it does then there would be several severe25 Dawn Schmidt Esq., Phone Interview 4/16/200726 ibid 26
  • 27. repercussions not mentioned before. First, not every county in Pennsylvania has aTax Claim Bureau. If the Court rules that the RETSL requires all claims to bereturned to the County Tax Claim Bureau, then what do the school districts do inAllegheny County, which includes Pittsburgh School District? According to Dawn Schmidt, “By the courts reasoning in PLTA v. EastStroudsburg, Allegheny County couldn’t abide by the court’s decision. I just can’tfollow their logic. I don’t see how this ruling helps anyone. Competition helps theschool districts. If you look at the RETSL, some Tax Claim Bureaus have too muchflexibility, but the RETSL doesn’t mandate efficiency. It is not fair that the SchoolDistrict is mandated to return claims to the Tax Claim Bureau where they haveabsolutely no influence. “27 A 2005 article in the Pittsburgh Tribune-Review titled, Push is on for countytax claim bureau stated, Allegheny County Controller Mark Patrick Flaherty is pushing a plan to consolidate collection of overdue property tax debts into one countywide tax claim bureau. Melding debt collection now carried out by 174 taxing bodies into one agency would speed collection of debts, increase efficiency and get properties back on tax rolls more rapidly, Flaherty said. "The whole process would just be a lot quicker in terms of getting liens erased from properties," he said. Flahertys plan would have no effect on local tax collectors responsibility to collect current taxes.”28 County Controller Mark Patrick Flaherty is not entirely correct in hisassessment of a County Tax Claim Bureau. Ideally the Tax Claim Bureau wouldspeed up collection, however it is not the reality across the state. The writer of thearticle was able to solicit an opinion from a local School Board President, who27 Dawn Schmidt Esq., Phone Interview 4/16/200728 Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review, 11/14/2005 27
  • 28. shared his opinion that a Tax Claim Bureau is not acting in the best interest of theSchool District. His argument confirms the opinion that only a local school districtknows their situation best. “Ed Wielgus, president of the North Hills School Board, said centralized debt collection might be a solution in search of a problem. "Ive always been amazed that the county and the state know whats best for the school districts. Local tax officials can be more responsive to cash-strapped residents, "They can go to their local person or go to their school board and get help.” “North Hills, for example, puts properties up for sale only when the owner refuses all help and cuts off communication with the district,” he said. Jake Haulk, president of the Allegheny Institute for Public Policy, said there appears to be a rush in Allegheny County to consolidate everything in government without considering the merits of doing so. If local governing officials and voters are happy with local control of debt collection, "theres no need to hand that off to somebody down on Grant Street," he said. County Chief Executive Dan Onorato, a Democrat, said he supports Flahertys idea. So does state Sen. Jim Ferlo, D-Highland Park. "Its definitely something I could wholeheartedly embrace," said Ferlo, minority chairman of the Senate Local Government Committee, which would likely review such a plan. Establishing the bureau would require a change in state law. State law now allows all counties except Allegheny to have centralized tax claims bureaus, and Ferlo said it would be relatively simple to add Allegheny County to the list. Westmoreland County is among the counties that uses a unified claims bureau. It has collected all debts for the county’s 65 taxing jurisdictions since the late 1970s and the system has worked well, said Westmoreland County Tax Office director Yvonne Hayes.”29 Pennsylvania Law specifically spells out the choices a School District has tosolve their delinquent tax problem. They can contract a private collector or use a TaxClaim Bureau, because in reality, the Tax Claim Bureau isn’t always the best option.29 Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review, 11/14/2005 28
  • 29. To be fair, in some situations a private collector may not be the best option. But it ismore important to note that not only does the Tax Claim Bureau take a 5% fee fromthe school district on the delinquent liens, but the County collects without any schooldistrict oversight. According to Michelle Portnoff, in Pennsylvania that 5% fee wasan estimated $32 million last year. “Thirty-two million dollars could have gone toteachers and textbooks.”30 A benefit of contracting Portnoff Law Associates, or any third party collectoris the school district’s ability to regulate the process and have controls. Local schooldistricts know their citizens and know the reality of their situation. Like AttorneyDawn Schmidt said, there is never one school district in the same position as another.School Districts in the Commonwealth of Pennsylvania range from very rural toextremely urban. Philadelphia schools face different challenges than EastStroudsburg. Revenue in Potter County schools is spent differently than MontgomeryCounty Schools. Two school districts in Montgomery County may have different taxbases and different obligations. Of course there is not a simple solution to thedifferences between PLTA and East Stroudsburg Area School District. It isimportant to note that if a solution is not found, students will suffer. The court deciding PLTA v. East Stroudsburg Area School District chose toaccept the argument that the availability of information to the real estate industry andthe general public outweigh the best interest of the school district, and the actualintent of the MCTAL altogether. The Court’s recent ruling does nothing to alleviatethe burden of delinquent taxes on the School District, rather it would simply mandateone collector per county for all delinquent claims within that county. In this scenario,30 Michelle Portnoff, Phone Interview 4/9/07 29
  • 30. how does a school district exercise control over their collection once the claims havebecome delinquent? In simple terms, they have absolutely no control. Schmidtelaborated the value of the MCTLA saying, “The MCTLA allows school districts tosell their debt, pass the collection on to a third party, or use the County Tax ClaimBureau. How can a school district make a choice when they are mandated by a courtto use the Tax Claim Bureau? The school districts have an incredible responsibilityto educate our children, and a result of mandating the use of a Tax Claim Bureau tocollect delinquent claims would limit the school district’s ability to choose what isbest for our children.”31Conclusion: When the Court decided PLTA v. East Stroudsburg Area School District itfailed to recognize the implications, consequences, and scope of their decision. TheCourt affirmed that the concurrence of the RETSL and MCTLA exist, however thelogic of the decision does not allow for that affirmation to realistically apply. Bothlaws fundamentally allow for school districts in the Commonwealth of Pennsylvaniato choose the delinquent tax claim collector for themselves and their tax-payingcitizens. The court’s decision contradicts itself and actual law. In part, the debate is over money. Who has the right to the taxpayer’s money?Some County Tax Claim Bureaus feel that it is their role to collect all of thedelinquent tax claims in their jurisdiction. Other Tax Claim Bureaus do not object tothe burden of tax collection to be shared. Some Tax Claim Bureaus areuncooperative to the extent that they won’t even recognize a third party collector to31 Dawn Schmidt Esq., Phone Interview 4/16/2007 30
  • 31. someone who asks for that kind of information. Two problems in this unique conflictare the division of public records, and the division of labor rights. State law gives the right to taxing districts in the Commonwealth to contractthird party delinquent tax collection, again, the court and most of the parties involveddo not disagree with this fact. All the parties in this conflict agree that the issue ismuch deeper than the practice of hiring a private tax collector. Is there acompromise? Some Tax Claim Bureaus want to collect all of the delinquent claims.A benefit would be a significant increase in county revenue. Some would like to seeall of the claims in the hands of private collectors, rapidly collecting the districtdelinquent taxes. But there is a middle ground. There can be a sharing of thedelinquent claims that allows for easy title searches, as well as expedient collectionoptions at the ready for school districts and taxing districts. Michelle Portnoffbelieves that the answer is computerized record keeping. PLTA believes that thatanswer is computerized record searches. Can a statewide, online, record repository be the answer? If that is theanswer, then who will foot the bill? Both the Pennsylvania Land Title Associationand Portnoff Law Associates are now seeking a legislative remedy to the problem.The PLTA realizes that it is unrealistic to go into every taxing district and ask thecourts to issue mandamus, ordering the records returned to the Tax Claim Bureaus.Portnoff realizes that in the future, a conflict in legislation will jeopardize private taxcollection. Can the legislature find a way to combine the MCTLA and RETSL intobalanced legislation? The legislature must realize that the real estate industry is 31
  • 32. burdened by the delinquent tax claim collection inconsistencies just as they mustrealize that the impact of a legislative remedy can benefit every Pennsylvania publicschool student. The legislature must find a way to protect private businesses, everycounty’s vitality, and the secured prosperity of all Pennsylvania school districts. Atthe center of this conflict is a demand for careful consideration to everyone involvedand connected to this issue. A compromise may not satisfy everyone, but a compromise will guarantee thatprecious Pennsylvanian jobs aren’t lost, students are competitively educated, andPennsylvania counties aren’t dependent on delinquent tax collection fees and interest.Without compromise, Pennsylvania schools will face an uncertain future. One solutionto this conflict is a state funded information-sharing network allowing for the securedstorage of public information. In this day and age, the ability to share essentialinformation is easy to implement. As easy as implementation may be, the cost is indeeda factor. It is a state function to secure welfare of the students, and an investment incompromise is an investment in the future. This change requires smart programming, anenvironment of cooperation, and the intent to honestly serve all Pennsylvanians. Gordon Rhoads 32
  • 33. Bibliography:PLTA v. East Stroudsburg Area School District No. 226 C.D. Argued 9/13/2006City of Allentown v Kauth No. 2060 C.D. 2004 No. 2061 C.D. 2005Jane Roach Esq., Attorney for Pennsylvania Land Title Association & Member ofthe Board of Directors of the Pennsylvania Bar Institute, Phone Interview on3/30/2007Michelle Portnoff Esq., President of Portnoff Law Associates, Phone Interview,4/9/07Sandy Dixon Esq., Chairman of the PLTA Legislative and Judicial Committee,Phone Interview 3/28/2007Dawn Schmidt Esq., Former Director of Portnoff Law Associates & Deputy City Solicitorfor the Philadelphia Major Tax Enforcement Division, Phone Interview 4/16/2007Rupert, Edward: AAP Journal Assessors Association of Pennsylvania, Issue 5Volume 2 Spring 2004Steve Levin: A Dream Foreclosed: Small Mistakes Giant Consequences, Pittsburgh Post-Gazette, 6/7/04: http://www.post-gazette.com/pg/04159/328289.stm accessed on 3/31/2007Glenn May: Push is On for County Tax Claim Bureau, Pittsburgh Tribune-Review,11/14/05: http://www.pittsburghlive.com/x/pittsburghtrib/s_394262.html accessed on 4/2/07RETSL, Section 201(a), 72 P.S. § 5860.201(a)Findlaw.com, 10/1/2000, Accessed on 3/29/2007:http://library.findlaw.com/2000/Oct/1/128768.html, Saul Ewing LLPThe Pennsylvania Real Estate Tax Sale Law Act 542 of 1947, P.L. 1368; 72 P.S. §5860.101The Pennsylvania Municipal Claims & Tax Liens Act (Municipal Claim and TaxLien Law) Act 153 of 1923, P.L. 207; 53 P.S. § 7101Sample letter signed by Alan B. Portnoff Esq., acquired from firm employee orientation, notdatedhttp://www.mapwatch.com/multi-maps/full/pennsylvania-county-map.gif (accessed4/18/07) sources of revenuehttp://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/souceoffnding.gif(accessed 4/18/07) statewide sources of school funding 33
  • 34. http://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/localtaxes.gif(accessed 4/18/07) local tax charthttp://www.pde.state.pa.us/schoolfinance101/lib/schoolfinance101/localbysource.gif(accessed 4/18/07) local sources of school revenue chartMorris, Christopher W. The Social Contract Theorists: Oxford England, 1999Fruchtman, Jack Jr. Thomas Pain Apostle of Freedom: New York NY, 1994Eckler, Peter. The Complete Political Works of Thomas Paine: New York NY, 1917 34
  • 35. Appendix:IN THE COMMONWEALTH COURT OF PENNSYLVANIAThe Pennsylvania Land Title :Association and Fidelity Home :Abstract, Inc., Individually and as :Representatives of All Other Individuals :and Entities Similarly Situated ::v. ::East Stroudsburg Area School District, :Dr. Rachel R. Heath, Superintendent of :East Stroudsburg Area School District, :Pleasant Valley School District, :Dr. Frank A. Pullo, Superintendent :Pleasant Valley School District, :June ONeill, Chestnuthill Township :Tax Collector, Helen Mackes, :Eldred Township Tax Collector, Carolyn :Meinhart, Polk Township Tax Collector, :Jean Altemose, Ross Township Tax :Collector, Alberta Tallada, East :Stroudsburg Borough Tax Collector, :Dawn Arnst, Middle Smithfield Tax :Collector, Sharon Gerberich, :Smithfield Township Tax Collector, :Kathy Mosher Kroll, Price Township :Tax Collector ::Appeal of: East Stroudsburg Area :School District, Pleasant Valley School :District, Dr. Rachel R. Heath and : No. 226 C.D. 2006Dr. Frank A. Pullo : Argued: September 13, 2006BEFORE: HONORABLE JAMES GARDNER COLINS, President JudgeHONORABLE BERNARD L. McGINLEY, JudgeHONORABLE DORIS A. SMITH-RIBNER, JudgeHONORABLE ROCHELLE S. FRIEDMAN, JudgeHONORABLE BONNIE BRIGANCE LEADBETTER, JudgeHONORABLE RENÉE COHN JUBELIRER, JudgeHONORABLE ROBERT SIMPSON, Judge2OPINION BY JUDGE McGINLEY FILED: November 22, 2006The East Stroudsburg School District (East Stroudsburg) and PleasantValley School District (Pleasant Valley) (collectively, the School Districts)1 appealfrom an order of the Court of Common Pleas of Monroe County (trial court) thatgranted the Pennsylvania Land Title Association’s (PLTA) and Fidelity HomeAbstract, Inc.’s (Fidelity) motion for peremptory judgment and issued a writ ofmandamus against the School Districts.On November 21, 2005, PLTA and Fidelity alleged in its class action2Complaint:1. . . .[PLTA] . . . is a duly organized Pennsylvania nonstock,non-profit corporation in good standing, whosestated mission is ‘the advancement of the science ofevidencing and insuring title to real property and theeducation of its members through various seminars andother educational functions’ . . . .2. . . . Fidelity . . . is a duly organized Pennsylvaniacorporation in good standing engaged in the business oftitle examination, real estate settlement services and thesale of title insurance . . . .1 This is a civil class action in mandamus against the School Districts, the SchoolDistricts’ Superintendents and eight tax collectors for a number of townships and a boroughlocated within the School Districts’ geographic boundaries in Monroe County.2 PLTA and Fidelity also commenced this action on behalf of a class defined as:[A]ll individuals and entities, including but not limited to soleproprietorships, partnerships, corporations, limited liabilitycompanies and associations whose business purposes and activitiesrequire that they have access to accurate public records and to tax 35
  • 36. Certifications from the public records of the Monroe County TaxClaim Bureau and the Monroe County Prothonotary relating toproperty taxes for properties located in the School Districts.Class Action Complaint In Mandamus (Complaint), November 21, 2005, Paragraph 36 at 10;Reproduced Record (R.R.) at 16a.33. . . . East Stroudsburg . . . is a school district of theSecond Class and a taxing district, located in Monroe andPike Counties . . . with its administrative offices in EastStroudsburg . . . .....5. . . . Pleasant Valley . . . is a school district of the ThirdClass and a taxing district located in Monroe County . . .with its administrative offices in Brodheadsville, MonroeCounty . . . .....16. . . . East Stroudsburg . . . and Pleasant Valley . . . areMonroe County taxing districts within the meaning of theSchool Code, the Local Tax Collection Act, the GeneralAssessment Act and the Real Estate Tax Sales Act.Count I17. The Monroe County Tax Claim Bureau, hereinafter“the Bureau” is a county office, established by the RealEstate Tax Sales Act, supervised by the Monroe CountyCommissioners and charged with various real estate taxcollection obligations under the Real Estate Tax SalesAct.....19. The Tax Collectors and or their predecessors in officehave not made any returns on any school taxes for theEast Stroudsburg School District to the Bureau for the taxyears 2002, 2003 and 2004. (emphasis added).20. The Tax Collectors and or their predecessors in officehave not made any returns on any school taxes for thePleasant Valley School District to the Bureau for the taxyears 2002, 2003 and 2004. (emphasis added).21. The Tax Collectors and or their predecessors in officehave instead, apparently at the direction of the SchoolDistricts, made returns to or relinquished their books, taxduplicates, data and or records solely to the SchoolDistricts. (emphasis added).22. The School Districts have pursued the collection ofand have collected delinquent taxes directly, in part4through the filing of municipal liens in the Office of theProthonotary of Monroe County. (emphasis added).23. Plaintiffs [PLTA and Fidelity] believes [sic] andtherefore avers [sic] that the Tax Collectors and theSchool Districts intend to continue the practice ofdepriving the Bureau of any returns, tax duplicates,records, data or books of school taxes, instead placingany returns and the books, tax duplicates and or recordsof the Tax Collectors with the School Districts.24. The Bureau is unable to provide Plaintiff [PLTA andFidelity], the Class and or public with Certifications orwith any access to the returns, data, tax duplicates, booksand records of school taxes for the real estate locatedwithin the geographic boundaries of the School Districts,for the tax years described above, as the Bureau has nocontrol of or access to any returns of any school taxesfrom the Tax Collectors, or to the books, tax duplicates,data and records of the collection of such school taxes bythe Tax Collectors. (footnote omitted).25. Returns and public records for all other taxingdistricts in Monroe County are duly returned to andavailable to the public at the Bureau.....29. Counsel to Plaintiffs [PLTA and Fidelity] hasrequested that the Tax Collectors make returns to theBureau and they have failed and refused to do so. 36
  • 37. (emphasis added).30. Counsel to Plaintiffs [PLTA and Fidelity] hasrequested that the School Districts return any returns,books, tax duplicates, data and records to the Bureau andthey have failed and refused to do so. (emphasis added).31. Counsel to Plaintiffs [PLTA and Fidelity] hasrequested that the School Districts relinquish all directpayments of delinquent taxes to the Bureau and they havefailed to do so. (emphasis added).32. The failure and refusal of the Tax Collectors and theSchool Districts to make returns and to relinquish the5returns, books, duplicates, data and records of the TaxCollectors and receipts of direct payments of delinquenttaxes to the Bureau warrants Mandamus relief . . . .(emphasis added).33. Plaintiffs [PLTA and Fidelity] have an immediate andcomplete legal right to the relief requested herein andhave a beneficial interest in this matter distinct from thegeneral public interest . . . .34. The ability of Plaintiffs [PLTA and Fidelity] and theClass reliably to search, to examine and to insure titles toreal estate in the School Districts has been substantiallyimpaired by the events, facts and circumstances set outabove. (emphasis added).35. Plaintiffs [PLTA and Fidelity] have no adequateremedy at law in that a suit for damages would notremedy the deprivation of access to public records of taxclaims and payments. (emphasis added).Complaint, Paragraphs 1-3, 5, 16-17, 19-25, and 29-35 at 2-8; R.R. at 8a-14a.Also, on November 21, 2005, PLTA and Fidelity sought a peremptoryjudgment on its mandamus claims and alleged:4. Plaintiffs [PLTA and Fidelity] are prepared to provethrough stipulations and through the testimony ofappropriate witnesses that there are no genuine issues ofmaterial fact in dispute. (emphasis added).5. Where there are no issues of material fact in dispute, aparty requesting mandamus relief is entitled toperemptory judgment prior to the filing of a responsivepleading by the Defendants [the School Districts].6. Plaintiffs [PLTA and Fidelity] request an evidentiaryhearing on their Motion for Peremptory Judgment.(emphasis added).67. The resolution of peremptory judgment prior tocertification of the proposed class is warranted in that:....c. The issuance of Peremptory Judgment prior to classcertification would result in a judgment that binds theindividual Plaintiffs [PLTA and Fidelity] and theDefendants [the School Districts] and not the Class;given the nature of the mandamus relief requested in thisaction, neither the Class nor the Defendants [the SchoolDistricts] would suffer harm if the mandamus reliefissued in the form of a peremptory judgment does notbind the class.Motion For Peremptory Judgment On Mandamus Claims, November 21, 2005,Paragraphs 4-7(c) at 1; R.R. at 38a.The trial court recounted the facts based upon the testimony3 elicitedat the December 7, 2005, hearing:The facts of this case are as follows: Briefly since 2003the Tax Collectors, following the instructions of theSchool Districts, have not made returns of delinquentschool taxes for tax years 2002, 2003 and 2004 to theMonroe County Tax Claim Bureau . . . . Instead, theSchool Districts have contracted with Portnoff LawAssociates, Ltd (hereinafter referred to as “Portnoff”), to3 The following parties testified: 1) Greg Christine (Christine), director of the MonroeCounty Tax Claim Bureau; 2) Dr. Rachael Heath (Heath), Superintendent of the EastStroudsburg School District; 3) Kathy Kroll Mosher (Mosher), tax collector for Price Township; 37
  • 38. 4) Dr. Frank Pullo (Pullo), Superintendent of the Pleasant Valley School District; 5) Donna Les(Les), business manager for Pleasant Valley School District; 6) Marie Guidry (Guidry), businessmanager for East Stroudsburg; 7) Robin Rodenhauser (Rodenhauser), Chief DeputyProthonotary for Monroe County; 8) Helen Decidue (Decidue), Recorder of Deeds for MonroeCounty; 9) Marshall E. Anders (Anders), attorney for Integrity Abstract; 10) Lori Cerato(Cerato), attorney and licensed insurance agent for Lawyers Title; 11) Charles Molinari(Molinari), title agent for Universal Abstract; 12) Craig Roberts (Roberts), underwriter forLawyers Title; and 13) Michelle Portnoff (Portnoff), principal partner for Portnoff LawAssociates, Ltd.7act as their solicitor for purposes of collecting delinquenttaxes using the provisions of the Municipal Claims andTax Lien Act. As a result, the Bureau has no records ofpaid or delinquent school taxes for properties locatedwithin the two School Districts for the tax years 2002,2003 and 2004. The School Districts are able to provideinformation regarding delinquent school tax records tothe general public upon request; however, theinformation is not readily available for viewing by thegeneral public, nor is the information updated after thedelinquent taxes are forwarded to Portnoff for collection.Consequently, title searchers, title insurance companies,mortgage companies, banks, attorneys and the generalpublic cannot obtain this information from the Bureau orthe School Districts; instead, they must contact Portnoff.Anyone requesting information from Portnoff can receivea verbal report on the status of such taxes free of charge;however, if a written report is requested, the cost is$25.00 to $50.00 depending on whether it is an expeditedrequest. When requesting a written report from Portnoff,it takes a minimum of five business days to receive theinformation for a regular request, and it takes twobusiness days to receive the information on an expeditedrequest. All responses to requests are sent by fax.Although identified as certifications, the reports preparedby Portnoff are not signed certifications. This sameinformation, if it were available at the Bureau, could beviewed by the requester either in printed form by lookingat the hard copy file or by using the computer terminalsthat are available for public use free of charge. If a taxlien certificate is requested from the Bureau, therequester would receive an “official” certification of thestatus of the taxes, whether paid or unpaid, on a specificparcel of real estate within a matter of minutes. The costof this official tax lien certificate is $10.00.Real estate attorneys and title agents who handle realestate matters regarding properties located in the SchoolDistricts have suffered monetary losses due to the lack ofor inaccuracy of information regarding the status of theschool taxes. They have also experienced delays inreceiving information from tax records which previouslyhad been instantly available at the Bureau. Confusion8has been created for delinquent taxpayers over who theyshould make delinquent tax payments to – the Bureau orPortnoff. Taxpayers have also experienced problemsobtaining credit because the tax liens filed by Portnoff inthe Monroe County Prothonotary’s Office have not beensatisfied even though they have been paid. (footnoteomitted).Opinion of the Trial Court, February 2, 2006, at 2-4.On February 2, 2006, the trial court granted the motion forperemptory judgment and issued a writ of mandamus: 1) that the School Districtsand tax collectors are to make future annual returns to the Bureau; 2) that theSchool Districts are to provide to the Bureau all of the School Districts’ books andrecords for tax years 2002, 2003, and 2004; 3) that the School Districts also are toprovide a detailed disclosure to the Bureau of the status of all real estate taxes forthe applicable tax years; 4) that the School Districts and tax collectors are to makepayments for the delinquent taxes shown on the returns only to the Bureau; 5) thatthe School Districts are to relinquish all future payments for delinquent taxes to the 38
  • 39. Bureau and to provide to the Bureau detailed property descriptions for which thepayments were made; 6) that the School Districts are to file a satisfaction of liensfor payments received on municipal liens; and 7) that the School Districts are toprovide full tax lien payoff information in writing, at no charge, within fivebusiness days of any written request. See Order of the Trial Court, February 2,2006, at 1-2.I. Whether The Trial Court Erred As A Matter Of Law When It DeterminedThat Section 306(a) Of The “Real Estate Tax Sale Law” (RETSL)4 WasMandatory?4 Act of July 7, 1947, P.L., as amended, 72 P.S. §§ 5860.306(a).9Initially, the School Districts assert5 that statutorily they chose tocollect delinquent taxes pursuant to the Municipal Claims and Tax Liens Act(MCTLA)6, 53 P.S. §§ 7101-7505 and, as a result, were not required to complywith Section 306(a) of the RETSL, 72 P.S. §5860.306(a). The School Districtsassert that under Pennsylvania law a taxing district may collect delinquent schooltaxes under either of the following; the MCTLA, the RETSL, or the Local TaxCollection Law (LTCL) .7Section 201(a) of the RETSL, 72 P.S. § 5860.201(a), provides:In lieu of or in addition to creating a bureau, counties areauthorized to provide by ordinance for the appointmentand compensation of such agents, clerks, collectors andother assistants and employes, either under existingdepartments, in private sector entities or otherwise asmay be deemed necessary, for the collection anddistribution of taxes under this act. Any alternativecollection method shall be subject to all of the notices,time frames, enumerated fees and protections for theproperty owners contained in this act . . . . (emphasisadded).Section 306(a) of the RETSL, 72 P.S. § 5860.306(a), provides:5 This Court’s review is limited to a determination of whether the trial court committedan abuse of discretion, an error of law, or rendered a decision which lacked supporting evidence.Bell v. Berks County Tax Claim Bureau, 832 A.2d 587, 590 (Pa. Cmwlth. 2003). Also,“[p]eremptory judgment in a mandamus action may be entered only where no genuine issue ofmaterial fact exists, and the case is free and clear from doubt.” Council of the City ofPhiladelphia v. Street, 856 A.2d 893, 896 (Pa. Cmwlth. 2004), citing Forward Township SanitarySewage Authority v. Township of Forward, 654 A.2d 170 (Pa. Cmwlth. 1998).6 Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§ 7101-7105.7 Act of May 25, 1945, P.L., as amended, 72 P.S. §§5511.1-5511.42.10It shall be the duty of each receiver or collector of anycounty, city, borough, town, township, school district orinstitution district taxes to make a return to the bureau onor before the last day of April of each year, but no earlierthan the first day of January of that year. The return shallbe type written on a form provided by or acceptable tothe county and shall include a list of all properties againstwhich taxes were levied, the whole or any part of whichwere due and payable in the calendar year immediatelypreceding and which remain unpaid, giving thedescription of each such property as it appears in the taxduplicate, and the name and address of the owner as itappears in the tax duplicate, together with the amount ofsuch unpaid taxes, penalties and interest due to but notincluding the first day of the month following the return .. . . (emphasis added).After review of the applicable statutory authority, this Court rejectsthe School Districts’ argument8, and concurs in the trial court’s analysis that8 This Court notes that the School Districts committed the following errors, whether intentionalor unintentional during argument. Specifically, the School Districts argue:The Trial Court cannot circumvent the School Districts’ choice toproceed under the MCTLA by requiring the Tax Collectors tomake a return to the Tax Claim Bureau under the RETSL on behalfof the School Districts. Section 5971t of the Local Tax CollectionLaw specifically prohibits a tax collector from making a return tothe tax claim bureau if a taxing district advises that delinquenttaxes will be collected by filing liens with the Prothonotary underthe MCTLA. 72 P.S. § 5971t (“No tax collector shall make anyreturn of taxes provided in this act, if the taxing authorities shall 39
  • 40. notify such tax collectors in writing that returns shall not be made,but that delinquent taxes are to be collected by the filing of liens inthe office of the prothonotary.”). The School Districts have givenwritten notice to the tax collectors that their delinquent taxes willbe collected by their Collection Solicitor under the MCTLA. (R.302a-303a). Therefore, the tax collectors are statutorily barredfrom making returns to the Tax Claim Bureau, furtherdemonstrating that filing returns with the RETSL is not amandatory requirement.(Footnote continued on next page…)11Section 306(a) of the RETSL, 72 P.S. § 5860.306(a) requires the School Districts“to make returns to the tax bureau” of all delinquent taxes:We have reviewed the provisions of the MCTLA andfind no provision that repeals § 5860.306 requiringreceivers, i.e. taxing districts, or tax collectors to makereturns to the tax claim bureau. Thus, there is no conflictbetween the two statutes regarding the requirement formaking returns of delinquent taxes to the tax claimbureau. Moreover, § 5511.21(b) of the LTCL, whichauthorizes a taxing district to recover unpaid taxes after areturn is made to a bureau, clearly recognizes therequirement of § 5860.306. The Court in Wallingford[Swarthmore School District v. Kuyumjian, 625 A.2d1305 (Pa. Cmwlth. 1993)] further stated that the authorityof a taxing district to recover unpaid taxes after a returnhas been made to a bureau has been the long standing lawof this Commonwealth. Wallingford, supra at 1307,citing Tremont Township School District v. WesternAnthracite Coal Co., 73 A.2d 670 (1950).Furthermore, Section 5860.201(a) of the RETSL givestax claim bureaus the authority to use other methods ofcollection, including the MCTLA, while at the same timerequiring compliance with the provisions of RETSL.Similarly, the 2004 amendment to the MCTLA also gavetax claim bureaus authority to use the procedures of thatact to collect delinquent real estate taxes in addition tothe procedures set forth in the RETSL. 53 P.S. Sec7193.5. Thus, if a tax claim bureau, as a taxing authority,is authorized to use the provisions of the MCTLA to(continued…)Brief for Appellants at 17.First, Section 21t of the Act of May 29, 1931, P.L. 280 (Act), 72 P.S. §5971t, wasrepealed and has no application to the RETSL: (“This section was repealed insofar as taxingdistricts coming within provisions of and operating under sections 5860.101-5860.803 of thistitle, by act 1947, July 7, P.L. 1368, § 801, section 5860.801 of this title”). Second, Section 21tof the Act was not part of the LTCL which is codified at 72 P.S. §§ 5511.1-5511.42.12collect delinquent taxes yet, is still required to complywith the provisions of the RETSL (72 P.S. Sec5860.201(a)), then it stands to reason that other taxingauthorities, like the School Districts, who have opted touse the MCTLA provisions, would likewise be requiredto comply with the RETSL provisions. Although notspecifically stated in the statutes, we believe thiscompliance requirement applies to the specific provisionfor making returns to the tax claim bureau. It should alsobe noted that the Commonwealth Court in [City ofAllentown v.] Kauth [, 874 A.2d 164 (Pa. Cmwlth.2005)] held that “the two statutes are very similar andoperate concurrently with one another . . .”. Kauth,supra, at 169. Likewise, we find that the MCTLA andRETSL statutes are not mutually exclusive, but insteadare very similar and their provisions are designed tooperate in conjunction with one another. Accordingly,we believe that it is possible to give effect to theprovisions of both the MCTLA and the RETSL;therefore, the provisions of these two statutory collectionschemes are not irreconcilable..... 40
  • 41. The importance of having access to the public records isevidenced by the testimonial accounts of problems thathave been encountered by real estate attorneys, titleinsurance agents and the general public . . . .....The dominant purpose of the RETSL is to providespeedier and more efficient procedures for enforcing taxliens and to improve the quality of titles obtained at a taxsale. Povlow [v. Brown, 315 A. 2d 375 (Pa. Cmwlth.1974)], supra. It is clear that the ability to obtainaccurate and complete information has been and willcontinue to negatively impact the quality of titles to realestate as long as the public records for the delinquentschool taxes continue to be diverted away from theBureau. Since the statutes are very similar and workconcurrently, the choice to use the procedures of theMCTLA to collect delinquent school taxes does notrelieve the School Districts or Tax Collectors of theirduty to make returns to the Monroe County Tax claimBureau as required § 5860.306 of the RETSL.(emphasis added and in original).13Opinion of the Trial Court at 24-26 and 31.II. Whether The Trial Court Erred When It Determined That The Right ToKnow Act9 Was Applicable?The School Districts next contend that the Right to Know Act is notapplicable because the Bureau is not solely authorized as the repository for publicrecords of delinquent taxes or issuer of official tax certifications. Specifically, theSchool Districts assert they complied with all laws addressing the availability ofpublic records.Section 1 of the Right to Know Act, 65 P.S. § 66.1, defines the term“agency” as “any political subdivision of the Commonwealth . . . or municipalauthority or similar organization created by or pursuant to a statute which declaresin substance that such organization performs or has for its purpose the performanceof an essential governmental function.”Also, Section 1 of the Right to Know Act defines the term “publicrecord” as “[a]ny account, voucher or contract dealing with the receipt ordisbursement of funds by an agency . . . .”Last, Section 2 of the Right to Know Act, 65 P.S. § 66.2, provides:(a) General rule. Unless otherwise provided by law, apublic record shall be accessible for inspection andduplication by a requester in accordance with this act. Apublic record shall be provided to a requester in themedium requested if the public record exists in that9 Act of June 21, 1957, P.L. 390, as amended, 65 P.S. §§ 66.1-66.9.14medium; otherwise, it shall be provided in the medium inwhich it exists. Public records shall be available foraccess during the regular business hours of an agency.Nothing in this act shall provide for access to a recordwhich is not a public record.Here, it is undisputed that the School Districts, the tax collectors andthe Bureau are “public” agencies and that the records of real estate tax paymentsby property owners are “public records” as defined by Section 1 of the Right toKnow Act, 65 P.S. § 66.1. The query before this Court is whether the SchoolDistricts complied with Section 2 of the Right to Know Act, 65 P.S. § 66.2 underthe challenged procedure for the collection of delinquent taxes so that the taxrecords are readily available to the public upon request.This Court again agrees with the observations of the trial court that:Representatives of . . . East Stroudsburg . . . testified thatinformation regarding school taxes is available, uponrequest, at the [East Stroudsburg’s] office. Thetestimony reveals that the information is looked up on thecomputer system by a school employee and the requesteris given an oral report; or if requested, a printed form willbe provided which shows all records paid or unpaid since1993; however, the report will not be signed. Thetestimony further revealed that members of the generalpublic cannot sit down at a computer themselves andaccess the tax records on the school’s database. The 41
  • 42. evidence also shows that [East Stroudsburg] is not able toprovide a current figure of delinquent school taxes for2002, 2003 or 2004 to a member of the general publicbecause those records are not updated on [EastStroudsburg’s] database once they are turned over toPortnoff for collection. Therefore, if the request is forthe status of such delinquent taxes, the requester isreferred to Portnoff. If a request is made for a taxcertification, [East Stroudsburg] cannot providecertifications on any delinquent taxes. The testimony15further revealed that when Portnoff files tax liens withthe Prothonotary of Monroe County, copies of those liensare placed in [East Stroudsburg’s] files; however, lieninformation is not put into the database and thus, cannotbe printed out for the general public. In that case, therequester is referred to the Monroe County Prothonotary.The testimony also revealed that the physical books arenot sent to Portnoff, instead [East Stroudsburg] feeds itsdatabase pertaining to delinquent taxes to Portnoff. Thephysical books are then stored in the basement of theschool and are not readily accessible to the general publicfor review. [N.T., 12/7/05: Kathy Kroll Mosher, pp. 38-48; Marie Guidry, pp. 74-85].....The testimony of the representative for Pleasant Valley . .. revealed the following: [Pleasant Valley] maintainsduplicates of the tax records at its office which areavailable for the public to review during normal businesshours on request; however, those records only show thestatus of the school taxes prior to becoming delinquentbecause they are not updated after being sent to Portnoff.A physical copy of the tax records is sent to Portnoff tobegin the collection process. The testimony revealed that[Pleasant Valley] is not computerized; therefore, there isno electronic database which can be searched by theschool staff or the general public. The evidence furtherrevealed that the records for delinquent taxes for taxyears 2002, 2003 and 2004 are kept at two locations-theoffices of Pleasant Valley and Portnoff. The testimonyalso revealed that the status of the paid delinquent bills ismaintained by Portnoff, and if the collection issuccessful, Portnoff does not report anything to theschool; however, if the collection is unsuccessful,Portnoff sends a periodic report to the school showingwhere they are in the collection process. Unlike, [EastStroudsburg], Pleasant Valley does not receive copies ofthe liens from Portnoff. [N.T., 12/7/05: Dr. Frank Pu1lo,Superintendent, p.49; Donna Les, Business Manager,pp.56-59]. (footnote omitted and emphasis added).Opinion of the Trial Court at 11-13.16Additionally, the evidence established that prior to the appointment ofPortnoff to collect delinquent taxes for the tax years of 2002, 2003, and 2004, theBureau maintained public dockets and records of all real estate taxes paid inMonroe County and that those tax records were readily available to the generalpublic and taxpayer upon request. Because the public is denied access to those taxdocuments, the trial court properly concluded that the School Districts violated theRight to Know Act.III. Whether The Trial Court Erred When It Found That The Six-MonthStatute Of Limitations And The Doctrine Of Laches Were Not Applicable?A. Statute Of LimitationsThe School Districts contend that PLTA’s and Fidelity’s claims werebarred by the six-month statute of limitations in 42 Pa. C.S. § 5522(a)(2).10Specifically, the School Districts contend that the most recent tax year in questionwas 2004 and that the tax records for that year were turned over to the SchoolDistricts on January 15, 2005. Therefore, PLTA and Fidelity had six months from10 In Thomas v. City of Philadelphia, 861 A.2d 1023 (Pa. Cmwlth. 2004), this Courtnoted that “[‘42 Pa. C.S.] § 5522 is not strictly a statute of limitations which bars the right tobring the action, but rather provides an affirmative defense to recovery.’ This issue must first be 42
  • 43. raised by the governmental defendant as an affirmative defense in its answer and new matter . . ..” Id. at 1027 n.8, citing Landis v. City of Philadelphia, 369 A.2d 746, 749 (Pa. Super. 1976)(interpreting the Act of 1937).However, in this case, PLTA and Fidelity filed their Complaint and motion forperemptory judgment on November 21, 2005. On November 30, 2005, the trial court orderedthat an evidentiary hearing be scheduled on December 7, 2005, concerning PLTA’s andFidelity’s motion for peremptory judgment. On December 14, 2005, the School Districts raisedthe statute of limitations argument in their supplemental brief in opposition to the motion forperemptory judgment. On February 2, 2006, the trial court granted PLTA’s and Fidelity’smotion for peremptory judgment and issued a writ of mandamus.17that date or until July 15, 2005, to file the Complaint and because the Complaintwas filed on November 21, 2005, the six-month statute of limitations had run.1142 Pa. C.S. § 5522(b)(2) provides:If the statement provided for by this subsection is notfiled, any civil action or proceeding commenced againstthe government unit more than six months after the dateof injury to person or property shall be dismissed and theperson to whom any such cause of action accrued for anyinjury to person or property shall be forever barred fromproceeding further thereon within the Commonwealth orelsewhere. The court shall excuse failure to comply withthis requirement upon a showing of reasonable excuse forfailure to file such statement. (emphasis added).There is no question that the six-month statute of limitations in 42 Pa.C.S. § 5522(b)(2) applies where a person fails to file either a statement or an actionwithin in this time period for an alleged injury to either person or property. “Whenthe words of a statute are clear and free from all ambiguity, the letter of it is not tobe disregarded under the pretext of pursuing its spirit.” Section 1921(b) of theStatutory Construction Act of 1972, 1 Pa. C.S. § 1921(b). Further, 42 Pa. C.S.§5522(b)(2) can be read in conjunction with Section 8541 and Section 8542 of theJudicial Code (Code)12, 42 Pa. C.S. §§ 8541-8542.11 Obviously, the School Districts contend that for the prior tax years of 2002 and 2003,the statute of limitations period ran even earlier.12 The “Political Subdivision Tort Claims Act” was the formal title which was repealed.The title is still used as the unofficial name for the successor provisions at Sections 8541-8542 ofthe Judicial Code, 42 Pa. C.S. §§ 8541-8542.18Section 8541 (Governmental immunity generally) of the Code, 42 Pa.C.S. 42 Pa. C.S. § 8541, provides that “[e]xcept as otherwise provided in thissubchapter, no local agency[13] shall be liable for any damages on account of anyinjury to a person or property caused by any act of the local agency or an employeethereof or any other person.” (emphasis added).Also, Section 8542 (Exceptions to governmental immunity), of theCode, 42 Pa. C.S. § 8542(b), provides:A local agency shall be liable for damages on account ofan injury to a person or property . . . if both of thefollowing conditions are satisfied . . . [t]he damageswould be recoverable under common law or a statutecreating a cause of action . . . [t]he injury was caused bythe negligent acts of the local agency or an employeethereof acting within the scope of his office or dutieswith respect to one of the categories listed in subsection(b). (emphasis added).Because the terms, injury, person, and property apply to tort actionsunder Section 8541 and Section 8542 of the Code, the six-month statute oflimitations in 42 Pa. C.S. § 5522(b)(2) may also be read in pari materia with thesesections and as such would bar any tort action filed after the six-month period.However, PLTA and Fidelity did not allege in their mandamusComplaint that the School Districts, tax collectors and school superintendents werenegligent and as a result of their negligence PLTA and Fidelity suffered an injury13 Local governmental agencies also include school districts. See Wells v. HarrisburgArea School District, 884 A.2d 946 (Pa. Cmwlth. 2005).19to either their person or property. Here, PLTA and Fidelity alleged that the SchoolDistricts and others failed to comply with the provisions of the RETSL whichimpaired their ability and the ability of the affected taxpayers to “search, examine,and insure titles” in regards to the payment of delinquent school taxes. Also,PLTA and Fidelity did not seek damages for any injury to person or property butrequested that the trial court order the School Districts to comply with the RETSL. 43
  • 44. Therefore, the six-month statute of limitations did not apply to the present actionand PLTA and Fidelity were not time barred from filing their Complaint.Assuming arguendo that the six-month statute of limitations didapply, the present action would still not be time barred. Specifically, 42 Pa. C.S.§5522(b)(3) provides:In the case of a civil action or proceeding against agovernment unit other than the Commonwealthgovernment:....(iii) Failure to comply with this subsection shall not be abar if the government unit had actual or constructivenotice of the incident or condition giving rise to the claimof a person. (emphasis added).In the present controversy, there is no question that the SchoolDistricts had actual notice of the incident that gave rise to PLTA’s and Fidelity’sclaim. After all, it was the decision of the School Districts to abandon theprovisions of the RETSL, which had been followed in Monroe County since 1947,when it ordered tax collectors to stop making any returns of public tax records tothe Bureau. Again, 42 Pa. C.S. § 5522(b)(2) does not apply.20B. Doctrine Of LachesThe School Districts contend that the doctrine of laches wasapplicable because the testimony at the December 7, 2005, hearing did notestablish any recent change of circumstances that made this matter more urgentand compelling now than at the time the School Districts began using Portnoff in2003 as solicitor and delinquent tax collector.In Erway v. Wallace, 415 A.2d 116 (Pa. Cmwlth. 1980), this Courtnoted:Laches is a proper defense to an action in mandamus.Our Supreme Court has stated that although mandamus isclassified as a legal remedy, it is a remedial process andis ‘“generally regarded as not embraced within thestatutes of limitation applicable to ordinary actions, butas subject to the equitable doctrine of laches.’”Commonwealth ex rel. Oliver v. Wilkes-Barre, 365 Pa.24, 26, 73 A.2d 420, 421 (1950) . . . .Of course, the circumstances of each case must beexamined to determine whether the requirements oflaches are met. The defense of laches bars relief when‘“the complaining party is guilty of want of due diligencein failing to institute his action to another’s prejudice.’”Leedom v. Thomas, 473 Pa. 193, 200, 373 A.2d 1329,1332 (1977). The “party claiming the benefit of thedoctrine of laches must demonstrate prejudice due tolapse of time.” Kay v. Kay, 460 Pa. 680, 685, 334 A.2d585, 587 (1975). (citations omitted and emphasis added).Id. at 117.A review of the record indicates that the School Districts have failedto identify any prejudice sustained as a result of the passage of time. At most, the21School Districts would have to comply with the mandates of the RETSL as orderedby the trial court. The trial court also directed the return of all books and recordsfor the tax years 2002, 2003, and 2004 and the payment for all delinquent taxes tothe Bureau by the School Districts and the tax collectors. See PLTA’s andFidelity’s Complaint, Request for Relief in Mandamus at 8-10; R.R. at 14a-16a.See also Order of the Trial Court, February 2, 2006, at 1-2. This Court agreeswith the trial court that the doctrine of latches does not apply to the currentcontroversy.IV. Whether The Trial Court Failed To Apply The Proper Standard When ItGranted PLTA’s And Fidelity’s Motion For Peremptory Judgment?Last, the School Districts contend there were numerous disputedfactual issues that included the accuracy and availability of information fromPortnoff, the effect on the taxpayers, the damages and inconvenience allegedlysuffered by title agents and insurers, and the effect on the quality of titles inMonroe County.In Thayer v. Lincoln Borough, 687 A.2d 1195 (Pa. Cmwlth.), appealdenied, 548 Pa. 676, 698 A.2d 598 (1997), this Court noted:In a mandamus action, Rule 1098 of the PennsylvaniaRules of Civil Procedure permits a court to enterperemptory judgment at any time after the filing of the 44
  • 45. complaint if the right of the plaintiff is clear . . . . Ingranting a motion for peremptory judgment under rule1098, courts use the same standard which governs thedisposition of a motion for summary judgment underRules 1035.1-1035.5 of the Pennsylvania Rules of CivilProcedure. Washowich [v. McKeesport Municipal WaterAuthority, 503 A.2d 1084 (Pa. Cmwlth. 1986)] at 1086.Thus, courts consider both the record actually presented22and the potential record at the time of trial. Id. Ajudgment will be entered only in the clearest of caseswhere there is no doubt as to the absence of material fact.Id. The burden of demonstrating that there is no disputeas to a material fact is on the moving party, and therecord must be examined in the light most favorable tothe nonmoving party. Id. (footnote and citation omitted,emphasis added).Thayer, 687 A.2d at 1197.Here, the record reflects that the following facts were not in dispute:1) that from January 2002, through 2004, the School Districts have collecteddelinquent taxes under the provisions of the MCTLA; 2) that eight tax collectorshave not made any returns on school taxes to the Bureau for the tax years of 2002,2003, and 2004 taxes; and 3) that the Bureau has no records of the School Districtsthat document the collection or delinquency of school taxes for the tax years of2002, 2003, and 2004. In fact, the School Districts acknowledged that there wasno dispute of material facts before the trial court:To make it easier, I think most of the facts are agreedupon between the parties. This is a peremptory judgmentcase. There’s some key facts that nobody disputes. Ireally don’t see much of a need for an evidentiaryhearing...... . . [I]t’s just a legal question of whether or not we have aministerial duty to turn over those records to the Bureaubased on the existing statutes, and I think those are thebasic facts and it’s just a legal dispute as to whether thatobligation exists. (emphasis added).N.T. at 10 and 12-13; R.R. at 113a and 115-16a.This Court agrees with the trial court’s conclusion that:23After a thorough review of the record, we find that thereare no genuine issues of material fact or law. Therefore,we find that Plaintiffs [PLTA and Fidelity] haveestablished that their legal right to the relief requested isspecific and well-defined by the provisions of theRETSL; that the School Districts, as public officials,have a ministerial duty to make returns of all delinquentschool taxes to the Bureau in accordance with § 5860.306of the RETSL; and the Plaintiffs [PLTA and Fidelity]have established that there is a lack of any otherappropriate and adequate remedy. Accordingly, we findthat Plaintiffs [PLTA and Fidelity] are entitled toperemptory judgment on the mandamus claims seeking torestore public tax records to the Monroe County TaxClaim Bureau and to insure the accurate satisfaction ofmunicipal liens filed in the Monroe CountyProthonotary’s Office.Opinion of the Trial Court at 32.Accordingly, this Court affirms.____________________________BERNARD L. McGINLEY, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIAThe Pennsylvania Land Title :Association and Fidelity Home :Abstract, Inc., Individually and as :Representatives of All Other Individuals :and Entities Similarly Situated ::v. :: 45
  • 46. East Stroudsburg Area School District, :Dr. Rachel R. Heath, Superintendent of :East Stroudsburg Area School District, :Pleasant Valley School District, :Dr. Frank A. Pullo, Superintendent :Pleasant Valley School District, :June ONeill, Chestnuthill Township :Tax Collector, Helen Mackes, :Eldred Township Tax Collector, Carolyn :Meinhart, Polk Township Tax Collector, :Jean Altemose, Ross Township Tax :Collector, Alberta Tallada, East :Stroudsburg Borough Tax Collector, :Dawn Arnst, Middle Smithfield Tax :Collector, Sharon Gerberich, :Smithfield Township Tax Collector, :Kathy Mosher Kroll, Price Township :Tax Collector ::Appeal of: East Stroudsburg Area :School District, Pleasant Valley School :District, Dr. Rachel R. Heath and : No. 226 C.D. 2006Dr. Frank A. Pullo :ORDERAND NOW, this 22nd day of November, 2006, the order of the Courtof Common Pleas of Monroe County in the above-captioned matter is affirmed.____________________________BERNARD L. McGINLEY, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIACity of Allentown ::v. : No. 2060 C.D. 2004:Richard J. Kauth, Lourdes Kauth ::v. ::Wachovia Bank, N.A., Domestic :Relations of County of Lehigh, :Allentown School District ::Appeal of: County of Lehigh :City of Allentown ::v. : No. 2061 C.D. 2004: Argued: April 5, 2005George Haaf, II ::v. ::County of Lehigh, Allentown :School District, Neffs National :Bank, East Penn Bank, New :Tripoli National Bank, Flora Jane :Dienst a/k/a Warner, Lloyd :L. Roberts, Arthur J. Masters ::Appeal of: County of Lehigh :BEFORE: HONORABLE ROBERT SIMPSON, JudgeHONORABLE MARY HANNAH LEAVITT, JudgeHONORABLE JESS S. JIULIANTE, Senior JudgeOPINIONBY JUDGE LEAVITT FILED: May 12, 20052 46
  • 47. The County of Lehigh (County) appeals from two orders entered bythe Court of Common Pleas of Lehigh County (trial court) on August 23, 2004,permitting the City of Allentown (City) to proceed with judicial sales of twoproperties pursuant to the Municipal Claims and Tax Liens Act (MCTLA).1 Atissue is whether the properties can be sold “free and clear” of liens for taxes leviedby the County, or whether divestiture of such liens is precluded by the Real EstateTax Sale Law (RETSL).2The facts in this case are not in dispute. The City commenced twoseparate actions under the MCTLA to collect delinquent real estate taxes andutility charges against properties owned by Richard and Lourdes Kauth and GeorgeD. Haaf, II. In both cases, the City obtained default judgments and filed writs ofexecution to expose the properties for upset sale on April 25, 2003. There were nothird-party bidders on the Kauth property; the sole bidder on the Haaf propertysubsequently defaulted. At the City’s request, the upset sales were vacated onSeptember 3, 2003.Thereafter, the City petitioned for a rule to show cause why theproperties should not be sold free and clear of all tax and municipal claims, liens,mortgages, charges and estates. Section 31 of the MCTLA, 53 P.S. §7281. TheCounty filed an answer denying all of the factual averments in the City’s petition,and the parties agreed that the threshold issue before the trial court was whether theCity’s proposed judicial sales pursuant to the MCTLA would divest the propertiesof taxes owed to the County and the Allentown School District, if the proceeds of1 Act of May 16, 1923, P.L. 207, as amended, 53 P.S. §§7101-7505.2 Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§5860.101-5860.803.3the sales were insufficient to satisfy those taxes.3 The County argued that by virtueof the RETSL its tax liens could not be divested. The trial court, with theagreement of the parties, treated the County’s response as a preliminary objection.On May 5, 2004, the trial court denied the County’s objections and scheduledhearings on the City’s petitions. The trial court entered final orders on August 23,2004, exposing the properties to judicial sales on September 24, 2004. TheCounty’s appeals from those orders have been consolidated for our review.4The County argues that the trial court erred by allowing the City toproceed under the MCTLA with judicial sales of the properties free and clear of allliens, including the County’s tax liens. The County contends that, by virtue ofSection 312 of the RETSL, 72 P.S. §5860.312, it may not be divested of its taxliens by a judicial sale conducted under authority of the MCTLA. It contends thatthe RETSL governs to the extent it conflicts with provisions in the MCTLA.The MCTLA was enacted in 1923 and governs, inter alia, themethods for levying and preserving municipal tax liens and the effect of judicialsales on liened property. In pertinent part, the MCTLA provides that all taxesimposed on real property by municipalities5 are a first lien on such property,subordinate only to tax liens imposed by the Commonwealth. Sections 1 and 2 ofthe MCTLA, 53 P.S. §§7102, 7103. Such liens are divested when the bid price at3 The Allentown School District is not a party in this appeal.4 Our scope of review in tax sale cases is limited to determining whether the trial court abused itsdiscretion, rendered a decision which lacked supporting evidence or clearly erred as a matter oflaw. Bell v. Berks County Tax Claim Bureau, 832 A.2d 587, 590 (Pa. Cmwlth. 2003).5 The term “municipality,” as used in the MCTLA, “means any county, city, borough,incorporated town, township, school district, or a body politic and corporate created as aMunicipal Authority pursuant to law and any assignees thereof.” 53 P.S. §7101.4an upset sale is equal to or in excess of the upset price. Sections 1 and 29 of theMCTLA, 53 P.S. §§7104, 7279. If the upset price is not achieved, as in the casesub judice, the taxing authority may petition a court to issue to all interested partiesa rule to show cause why the property should not “be sold, freed, and cleared oftheir respective claims, mortgages, charges, and estates.” Section 31 of theMCTLA, 53 P.S. §7281.6 Once the court is satisfied that the facts in the petitionare true and that all interested parties have received proper notice, “it shall orderand decree that said property be sold at a subsequent sheriffs sale day, to be fixedby the court without further advertisement.” Id. (emphasis added). Section 31further provides that[a]ll property at sheriffs sale shall be sold, clear of all claims,liens, mortgages, charges, and estates, to the highest bidder atsuch sale; and the proceeds realized therefrom shall bedistributed in accordance with the priority of such claims; andthe purchaser at such sale shall take, and forever thereafterhave, an absolute title to the property sold, free, and dischargedof all tax and municipal claims, liens, mortgages, charges, andestates of whatsoever kind, subject only to the right of 47
  • 48. redemption as provided by law.53 P.S. §7281 (emphasis added). Thus, as the emphasized language makes clear, ajudicial sale under the MCTLA divests all liens levied against the affected propertywithout exception. There is no authority in the MCTLA for a court to exemptcertain claims or taxes from the sweep of the mandate that property sold at a6 The taxing authority must file a petition “setting forth that more than one year has elapsed sincethe filing of his claim; that he has exposed the property to sheriffs sale thereunder, and wasunable to obtain a bid sufficient to pay the upset price in full; and, . . . [produce] searches or atitle insurance policy showing the state of the record and the ownership of the property, and of alltax and municipal claims, mortgages, ground-rents, or other charges on or estates in the land.”53 P.S. §7281.5judicial sale is sold “free, and discharged of all tax and municipal claims, liens,mortgages, charges, and estates of whatsoever kind.” Id.The County contends that by virtue of the RETSL its tax liens cannotbe divested by a judicial sale under the MCTLA. It notes that the RETSL wasenacted in 1947 and is similar to the MCTLA with respect to its overall purpose,i.e., the collection of delinquent taxes. The RETSL creates tax claim bureaus ineach county, other than counties of the first and second class, and affords “taxingdistricts”7 the opportunity to return delinquent taxes to the bureaus for collection.Sections 102, 201-204 of the RETSL; 72 P.S. §§5860.102, 5860.201-204. Like theMCTLA, the RETSL establishes that all taxes levied on property by a taxingdistrict are considered a first lien on the property. Section 301 of the RETSL, 72P.S. §5860.301.The RETSL’s mechanisms for upset and judicial sales are virtuallyidentical to those in the MCTLA. A taxing district must first attempt to selldelinquent property at an upset sale and, if the upset price is not bid, petition thecourt for a rule to show cause why the property should not be exposed to judicialsale. 72 P.S. §§5860.605, 5860.610. The requirements for the petition are, for allintents and purposes, identical to those in the MCTLA. Section 610 of the RETSL,72 P.S. §5860.610. Once the court is satisfied that service has been made uponinterested parties and that the facts stated in the petition are true,7 A “taxing district” is defined as “any county, city, borough, incorporated town, township, homerule municipality, optional plan municipality, optional charter municipality, school district,institution district or any similar general purpose unit of government which may be created orauthorized by statute except counties of the first and second class and cities, boroughs,incorporated towns, townships, home rule municipalities, optional plan municipalities, optionalcharter municipalities, school districts or institution districts therein and cities of the second classA and school districts therein.” 72 P.S. §5860.102.6[the court] shall order and decree that said property be sold at asubsequent day to be fixed by the court, freed and cleared of alltax and municipal claims, mortgages, liens, charges and estates,except separately taxed ground rents, to the highest bidder, andthat the purchaser at such sale shall take and thereafter have anabsolute title to the property sold free and clear of all tax andmunicipal claims, mortgages, liens, charges and estates ofwhatsoever kind, except ground rents, separately taxed.72 P.S. §5860.612 (emphasis added). Thus, the RETSL, like the MCTLA,contemplates the divestiture of all liens, with no exception, when a property isexposed to a judicial sale.The County focuses on Section 312 of the RETSL, which provides:Any such claim for taxes, if such taxes were returned to thebureau within the time required by this act, shall remain a lienupon said property until fully paid and satisfied, or until saidproperty shall be sold as provided in this act. If a tax is notreturned to the bureau within the time required by this act, itslien on the property shall be wholly lost. But where a tax hasnot been returned as required by this act, a taxing district maynevertheless proceed, by action in assumpsit, to recover theamount of any taxes due and owing by an owner at any timewithin six (6) years after the taxes first became due.72 P.S. §5860.312 (emphasis added). The County argues that this languageexpresses an intent by the legislature that taxing districts coordinate their taxcollection efforts through county tax claim bureaus. Those taxing districts stand tolose the protection afforded by Section 312 if municipalities such as the City mayproceed with a free and clear judicial sale under the MCTLA. Although theCounty acknowledges that the RETSL did not expressly repeal any specificprovisions of the MCTLA, it contends that the operative provisions of the twostatutes are irreconcilable and that the RETSL, which was enacted later in time, 48
  • 49. impliedly repealed the MCTLA. Alternatively, the County urges this Court to7engraft a qualifier onto the “free and clear” sale provisions of the MCTLA andrequire a municipality proceeding under that act to include in its opening bid pricethe dollar amounts of claims turned over to a tax claim bureau pursuant to theRETSL.Section 1971 of the Statutory Construction Act of 1972, 1 Pa.C.S.§1971, governs our inquiry and provides as follows:(a) Whenever a statute purports to be a revision of all statutesupon a particular subject, or sets up a general or exclusivesystem covering the entire subject matter of a former statute andis intended as a substitute for such former statute, such statuteshall be construed to supply and therefore to repeal all formerstatutes upon the same subject.(b) Whenever a general statute purports to establish a uniformand mandatory system covering a class of subjects, such statuteshall be construed to supply and therefore to repeal pre-existinglocal or special statutes on the same class of subjects.(c) In all other cases, a later statute shall not be construed tosupply or repeal an earlier statute unless the two statutes areirreconcilable.It is axiomatic that implied repeals are not favored by the law. In re DelinquentTax Sale, 477 A.2d 603, 605 (Pa. Cmwlth. 1984).The RETSL does not fit into the categories designated in subsections(a) or (b) since the tax claim bureaus it creates become operative only to the extentcounties and municipalities elect to utilize them; in other words, the RETSL taxcollection scheme is optional rather than mandatory. Cedarbrook Realty, Inc. v.Nahill, 484 Pa. 441, 456-457, 399 A.2d 374, 382 (1979). See also Section 208 ofthe RETSL, 72 P.S. §5860.208 (the tax claim bureau “shall . . . be the agent of thetaxing districts whose tax claims are returned to the bureau for collection andprosecution under the provisions of this act . . .”.). Thus, the City, which8presumably has not opted in to the RETSL scheme, was free to proceed under theMCTLA with respect to the sale of the properties at issue in this case.We disagree with the County’s assertion that Section 312 of theRETSL is irreconcilable with, and therefore impliedly repealed, Section 7281 ofthe MCTLA.8 Our Supreme Court has held that when a tax sale is commencedunder a particular act of the General Assembly,the procedure therein prescribed must be followed and underthat act alone must the validity and effect of the sale be tested.Other legislation providing a different procedure or resultcannot be used either to sustain such sale or secure additionalrights or results. The act under which the proceeding is hadmust show the authority and the effect of such sale.Gordon v. City of Harrisburg, 314 Pa. 70, 73, 171 A. 277, 278 (1934). WhileGordon was decided before the RETSL was enacted, the validity of its announcedprinciple remains valid and controls the outcome of this case. The City elected toproceed under the MCTLA and had legal authority to do so. The validity andeffect of the City’s judicial sale is therefore tested under the MCTLA alone,without regard to the RETSL or any other legislation.This Court also addressed an issue similar to the one at bar in In reDelinquent Tax Sale, 477 A.2d 603 (Pa. Cmwlth. 1984). In that case, the trialcourt denied appellant’s petition under the so-called Compromise Act9 to approve acompromise of delinquent real estate taxes, penalties, interest and costs. In doing8 The legislative history of the two acts suggests otherwise. The General Assembly reviewed(and amended) Section 7281 of the MCTLA in 2003, Act of August 14, 2003, P.L. 83, andpresumably perceived no conflict with Section 312 of the RETSL, which was last amended in1986. Act of July 3, 1986, P.L. 351.9 Act of November 23, 1938, Sp. Sess., P.L. 90, 72 P.S. §§5551-5554.9so, the court agreed with the county tax claim bureau that certain provisions of theCompromise Act were irreconcilable with the later-enacted RETSL and had beenimpliedly repealed. This Court reversed, noting that implied repeals are generallydisfavored and, more importantly, that “[t]here is nothing inherently inconsistentin the existence of two distinct statutory procedures for the resolution of the samedisputes even though the result may be a lack of symmetry in the area.” Id., 477A.2d at 605 (quoting Pennsylvania Turnpike Commission v. Sanders & Thomas,Inc., 461 Pa. 420, 429, 336 A.2d 609, 614 (1975)).The same is true in this case. As the trial court aptly noted, theMCTLA and RETSL are not inconsistent with one another; rather, they permit, 49
  • 50. through strikingly similar and parallel mechanisms, a taxing authority to expose adelinquent property for an upset sale and, in the absence of receiving the upsetprice by which to satisfy the delinquent taxes and claims, a “free and clear” judicialsale. Whether the judicial sale is effected under the MCTLA or the RETSL theintent of the legislature is the same: to return real property to productive use undernew ownership. See Bell v. Berks County Tax Claim Bureau, 832 A.2d 587, 593n.13 (Pa. Cmwlth. 2003).10In sum, we agree with the trial court’s astute legal analysis regardingthe purported conflict between the MCTLA and the RETSL. We hold that the twostatutes are very similar and operate concurrently with one another, due to the factthat the RETSL establishes an alternative for the collection of delinquent tax10 Alternatively, the County urges this Court to combine aspects of an upset sale and a judicialsale by engrafting a qualifier onto the “free and clear” sale provisions of the MCTLA so as toinclude the amount of any RETSL tax liens in the opening bid price. We decline to do so andnote that this Court rejected a similar argument in Bell. Such a mechanism would also frustratethe legislature’s clear directive that a judicial sale result in the divestiture of all liens.10claims, but not a mandatory alternative. The County’s argument would require usto find, in derogation of the express language used by the legislature, that RETSLis mandatory. We find no merit to the County’s claim that any or all of theprovisions of the MCTLA have been impliedly repealed by the RETSL.Accordingly, we affirm the orders of the trial court exposing thesubject properties to judicial sale.______________________________MARY HANNAH LEAVITT, JudgeIN THE COMMONWEALTH COURT OF PENNSYLVANIACity of Allentown ::v. : No. 2060 C.D. 2004:Richard J. Kauth, Lourdes Kauth ::v. ::Wachovia Bank, N.A., Domestic :Relations of County of Lehigh, :Allentown School District ::Appeal of: County of Lehigh :City of Allentown ::v. : No. 2061 C.D. 2004:George Haaf, II ::v. ::County of Lehigh, Allentown :School District, Neffs National :Bank, East Penn Bank, New :Tripoli National Bank, Flora Jane :Dienst a/k/a Warner, Lloyd :L. Roberts, Arthur J. Masters ::Appeal of: County of Lehigh :ORDERAND NOW, this 12th day of May, 2005, the orders of the Court ofCommon Pleas of Lehigh County in the above-captioned matter, datedAugust 23, 2004, are hereby AFFIRMED._____________________________MARY HANNAH LEAVITT, Judge 50
  • 51. PENNSYLVANIA LAND TITLE ASSOCIATION 1005 W. Ninth Avenue, Suite B King of Prussia, PA 19406 610-265-5980 fax 610-265-5998 www.plta.org MEMOTo: PLTA MembersFrom: Adrienne Verdone, Esq., CLTP, PLTA PresidentDate: November 29, 2006I am very pleased to report to you that the Commonwealth Court has ruled in our favor inthe case of The Pennsylvania Land Title Association and Fidelity Home Abstract,Inc. v. The East Stroudsburg area School District (No. 226 CD 2006). Access toaccurate public records was at the heart of this lawsuit and the court’s decision firmlystates that such access cannot be denied or restricted. The court confirmed the lowercourt’s decision that under the Real Estate Tax Sale law a School District must makeannual returns to the Tax Claim Bureau. The court also confirmed that under the Right toKnow Act, a School District must make tax records available to the public, and that thecollection system in issue, with records being kept and maintained by an external thirdparty and not reported back to the School District, did not satisfy this law. I would like tothank the following people for their hard work and perseverance in pursuing this case:Craig Roberts, CLTP, President of Fidelity Home Abstract, for bringing this matter tothe attention of PLTA, being the named plaintiff and ably testifying in court;Jane Roach, Esq., PLTA’s attorney in this matter, for her legal acumen, courtroom skillsand ever- positive attitude:Sandy Dixon, Esq., Chairman of the PLTA Legislative and Judicial Committee, for hiswillingness to commit the resources of his committee to this worthwhile cause;The Underwriter, Agent and Affiliate members of PLTA, without whose support noneof this would be possible.Sincere thanks to everyone for a job well done! 51
  • 52. THE GENERAL ASSEMBLY OF PENNSYLVANIA SENATE BILL No. 508 Session of 2003 INTRODUCED BY DENT, RAFFERTY, COSTA, ARMSTRONG, THOMPSON AND FERLO, MARCH 18, 2003 AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 22, 2004 AN ACT 1 Amending the act of May 16, 1923 (P.L.207, No.153), entitled "An 2 act providing when, how, upon what property, and to what 3 extent, liens shall be allowed for taxes and for municipal 4 improvements, for the removal of nuisances, and for water 5 rents or rates, sewer rates, and lighting rates; for the 6 procedure upon claims filed therefor; the methods for 7 preserving such liens and enforcing payment of such claims; 8 the effect of judicial sales of the properties liened; the 9 distribution of the proceeds of such sales, and the10 redemption of the property therefrom; for the lien and11 collection of certain taxes heretofore assessed, and of12 claims for municipal improvements made and nuisances removed,13 within six months before the passage of this act; and for the14 procedure on tax and municipal claims filed under other and15 prior acts of Assembly," PROVIDING FOR THE DEFINITION OF <--16 "CHARGES, EXPENSES AND FEES"; AND further providing for17 redemption of property AND FOR CHALLENGING FORECLOSURE SALES. <--18 The General Assembly of the Commonwealth of Pennsylvania19 hereby enacts as follows:20 Section 1. Section 32 of the act of May 16, 1923 (P.L.207, <--21 No.153), referred to as the Municipal Claim and Tax Lien Law,22 amended December 19, 1990 (P.L.1092, No.199) and December 14,23 1992 (P.L.859, No.135), is amended to read: 1 SECTION 1. SECTION 1 OF THE ACT OF MAY 16, 1923 (P.L.207, <-- 2 NO.153), REFERRED TO AS THE MUNICIPAL CLAIM AND TAX LIEN LAW, 3 AMENDED AUGUST 14, 2003 (P.L.83, NO.20), IS AMENDED BY ADDING A 4 DEFINITION TO READ: 5 SECTION 1. BE IT ENACTED, &C., THAT THE WORD "TAXES," AS 6 USED IN THIS ACT, MEANS ANY COUNTY, CITY, BOROUGH, INCORPORATED 7 TOWN, TOWNSHIP, SCHOOL, BRIDGE, ROAD, OR POOR TAXES, TOGETHER 8 WITH AND INCLUDING ALL PENALTIES, INTEREST, COSTS, CHARGES, 9 EXPENSES AND FEES, INCLUDING REASONABLE ATTORNEY FEES, AS10 ALLOWED BY THIS ACT AND ALL OTHER APPLICABLE LAWS.11 * * *12 THE WORDS "CHARGES, EXPENSES, AND FEES" AS USED IN THIS ACT,13 INCLUDE ALL SUMS PAID OR INCURRED BY A MUNICIPALITY TO FILE,14 PRESERVE AND COLLECT UNPAID TAXES, TAX CLAIMS, TAX LIENS,15 MUNICIPAL CLAIMS, AND MUNICIPAL LIENS, INCLUDING BUT NOT LIMITED16 TO, PROTHONOTARY AND SHERIFF FEES, POSTAGE EXPENSES, AND TITLE17 SEARCH EXPENSES. A COUNTY, CITY, BOROUGH, INCORPORATED TOWN, 52
  • 53. 18 TOWNSHIP, SCHOOL DISTRICT, OR MUNICIPAL AUTHORITY MAY ALSO19 RECOVER AS "CHARGES, EXPENSES, AND FEES", THE CHARGES, EXPENSES,20 COMMISSIONS, AND FEES OF THIRD-PARTY COLLECTORS RETAINED BY THE21 COUNTY, CITY, BOROUGH, INCORPORATED TOWN, TOWNSHIP, SCHOOL22 DISTRICT, OR MUNICIPAL AUTHORITY, PROVIDED THAT THE CHARGES,23 EXPENSES, COMMISSIONS, AND FEES OF SUCH THIRD-PARTY COLLECTORS24 ARE APPROVED BY LEGISLATIVE ACTION OF THE COUNTY, CITY, BOROUGH,25 INCORPORATED TOWN, TOWNSHIP, SCHOOL DISTRICT, OR MUNICIPAL26 AUTHORITY WHICH LEVIES THE UNPAID TAXES, TAX CLAIMS, TAX LIENS,27 MUNICIPAL CLAIMS AND MUNICIPAL LIENS.28 SECTION 2. SECTION 32 OF THE ACT, AMENDED DECEMBER 19, 199029 (P.L.1092, NO.199) AND DECEMBER 14, 1992 (P.L.859, NO.135), IS30 AMENDED TO READ: 1 Section 32. (a) The owner of any property sold under a tax 2 or municipal claim, or his assignees, or any party whose lien or 3 estate has been discharged thereby, may, except as provided in 4 [subsections (c) and (d)] subsection (c) of this section, redeem 5 the same at any time within [one year] three NINE months from <-- 6 the date of the acknowledgment of the sheriffs deed therefor, 7 upon payment of the amount bid at such sale; the cost of 8 drawing, acknowledging, and recording the sheriffs deed; the 9 amount of all taxes and municipal claims, whether not entered as10 liens, if actually paid; the principal and interest of estates11 and encumbrances, not discharged by the sale and actually paid;12 the insurance upon the property, and other charges and necessary13 expenses of the property, actually paid, less rents or other14 income therefrom, and a sum equal to interest at the rate of ten15 per centum per annum thereon, from the time of each of such16 payments. If both owner and creditor desire to redeem, the owner17 shall have the right so to do only in case he pays the18 creditors claim in full. If more than one creditor desires to19 redeem, the one who was lowest in lien at the time of sale shall20 have the prior right, upon payment in full of the claim of the21 one higher in lien. Within the [year] three [THE YEAR] NINE <--22 months, one who was lower in lien may redeem from one higher in23 lien who has already redeemed, and the owner may redeem from24 him; and so on throughout, in each case by paying the claim of25 the one whose right was higher; and one higher in lien may26 redeem from one lower in lien, unless his claim is paid; but in27 each case the right must be exercised within the [year] three <--28 [THE YEAR] NINE months. <--29 (b) Any person entitled to redeem may present his petition30 to the proper court, setting forth the facts, and his readiness 1 to pay the redemption money; whereupon the court shall grant a 2 rule to show cause why the purchaser should not reconvey to him 3 the premises sold; and if, upon hearing, the court shall be 4 satisfied of the facts, it shall make the rule absolute, and 5 upon payment being made or tendered, shall enforce it by 6 attachment. 7 (c) Notwithstanding any other provision of law to the 8 contrary, in [cities of the first class only] any city, 9 township, borough or incorporated town, there shall be no10 redemption of vacant property by any person after the date of 53
  • 54. 11 the acknowledgment of the sheriffs deed therefor. For the12 purposes of this subsection, property shall be deemed to be13 "vacant property" unless it was continuously occupied by the14 same individual or basic family unit as a residence for at least15 ninety days prior to the date of the sale and continues to be so16 occupied on the date of the acknowledgment of the sheriffs deed17 therefor.18 [(d) Notwithstanding any other provision of law to the19 contrary, in counties of the second class only, the owner of any20 property sold under a tax or municipal claim, or his assignees,21 or any party whose lien or estate has been discharged thereby,22 may redeem the same at any time within three months from the23 date of the acknowledgment of the sheriffs deed therefor, upon24 payment of the amount bid at such sale; the cost of drawing,25 acknowledging and recording the sheriffs deed; the amount of26 all taxes and municipal claims, whether not entered as liens, if27 actually paid; the principal and interest of estates and28 encumbrances, not discharged by the sale and actually paid; the29 insurance upon the property and other charges and necessary30 expenses of the property, actually paid, less rents or other 1 income therefrom; and a sum equal to interest at the rate of ten 2 per centum per annum thereon, from the time of each of such 3 payments. If both owner and creditor desire to redeem, the owner 4 shall have the right so to do only in case he pays the 5 creditors claim in full. If more than one creditor desires to 6 redeem, the one who was lowest in lien at the time of sale shall 7 have the prior right, upon payment in full of the claim of the 8 one higher in lien. Within the three-month period, one who was 9 lower in lien may redeem from one higher in lien who has already10 redeemed, and the owner may redeem from him; and so on11 throughout, in each case by paying the claim of the one whose12 right was higher; and one higher in lien may redeem from one13 lower in lien, unless his claim is paid; but in each case the14 right must be exercised within the three-month period.]15 SECTION 2 3. SECTION 39.3 OF THE ACT, ADDED DECEMBER 14, <--16 1992 (P.L.858 859, NO.135), IS AMENDED TO READ: <--17 SECTION 39.3. ALL PARTIES WISHING TO CONTEST THE VALIDITY OF18 ANY SALE CONDUCTED PURSUANT TO SECTION 31.2 OF THIS ACT,19 INCLUDING THE SUFFICIENCY OF ANY NOTICE, AND ANY PARTY CLAIMING20 TO HAVE AN INTEREST IN THE PREMISES WHICH WAS NOT DISCHARGED BY21 THE SALE MUST FILE A PETITION SEEKING TO OVERTURN THE SALE OR TO22 ESTABLISH THE INTEREST WITHIN [SIX] THREE MONTHS OF THE23 ACKNOWLEDGMENT OF THE DEED TO THE PREMISES BY THE SHERIFF.24 Section 2 3 4. This act shall take effect in 60 days. <-- 54
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