Summary
This Commonwealth Court of Pennsylvania opinion affirms a trial court's order resolving a dispute between a successful bidder at an upset tax sale and bidders at a subsequent sheriff's sale for the same property. The court held that under Section 609 of the Real Estate Tax Sale Law, the tax sale did not divest the senior mortgage lien, allowing the sheriff's sale to extinguish the tax sale purchaser's interest. The court also addressed standing to challenge the tax sale, sovereign immunity, and the proper remedy for conflicting sales.
Topics
Practice areas
Questions Presented
- Whether an upset tax sale under 72 P.S. § 5860.609 divests a senior mortgage lien and thus prevents a subsequent sheriff’s sale from conveying good title
- Whether the Kitzmillers have superior title to the property and are entitled to quiet‑title relief and protection from Halkias’ ejectment claim
- Whether the Kitzmillers had standing to object to the tax sale and whether the trial court erred in dismissing their petition
- Whether sovereign immunity bars a quiet‑title action against the Lycoming County Tax Claim Bureau
Holdings
- An upset tax sale conveys title "under and subject to the lien of every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in the upset price," and therefore does not divest a senior mortgage lien.
- The Kitzmillers hold superior title to the surface rights of the property because the sheriff’s sale conveyed those rights subject to the mortgage, which the tax sale did not divest; therefore the trial court’s quiet‑title judgment in favor of the Kitzmillers is affirmed.
- The Kitzmillers lacked standing to object to the tax sale because they were neither owners nor lien creditors of the property on the date of the tax sale; the trial court correctly dismissed their petition.
- Sovereign immunity does not bar the quiet‑title action because the Bureau is a local agency, not the Commonwealth, and the action seeks title, not damages.
Key quotations
“Tax upset sales convey title to property “under and subject to the lien of every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in the upset price.” 72 P.S. § 5860.609.” (at 8‑9)
“The Bureau is directed to deliver a non‑warranty deed to Halkias, limited to whatever Subsurface interest may remain with that Bureau in the Property.” (at 12‑13)
Factual background
The 115.41‑acre property at 5742 Moreland Baptist Road was subject to an upset tax sale in September 2020, which James Halkias won, and a sheriff’s sale in November 2020, which the Kitzmillers won. The tax sale conveyed title subject to all recorded liens, including a $766,000 mortgage. The sheriff’s sale transferred the surface rights subject to that mortgage. The parties disputed whether the tax sale divested the mortgage lien and which party held superior title.
Procedural history
The trial court dismissed the Kitzmillers' objections to an upset tax sale, granted a quiet‑title judgment to the Kitzmillers, and denied Halkias' ejectment claim. Halkias appealed that decision to the Commonwealth Court of Pennsylvania.