Upset Tax Sales and the Many Ways to Have Them Overturned

By: Michael G. Louis

I had another successful year having tax sales overturned or settling the cases after filing petitions to overturn tax sale after the owners had lost them at upset tax sales in 2023.

In one of them the Tax Claim Bureau did not advertise the sale in two newspapers of general circulation in that county.  Unless there is only one newspaper of general circulation in that county that is a clear violation of the Real Estate Tax Sale Act.  If the Tax Claim Bureau does not comply with all of the requirements, and there are many, then the tax sale will be overturned.

I had another one where the owner of the property had died before the tax sale and there was an estate opened and my client was the executrix but she was never notified of the tax sale.  That case settled because we filed a very persuasive petition to overturn the tax sale which was probably going to be a winner if it didn’t settle.

In another one, even though my client did not sign the certified mail, return receipt card the Tax Claim Bureau did not exercise reasonable efforts to discover the whereabouts of the owner of the property and notify her.  Again, that is a violation of the clear mandate of the statute and since I raised it in the petition to overturn tax sale and supported it by depositions the case settled for a reasonable amount.  

In another case, my client had lost his property at a sheriff’s sale for real estate taxes.  In that situation you have nine months to redeem the property which my client did and the court found he did it timely.

I had another case where my client decided that there was not enough equity in the property to fight the tax sale because the amount bid at the tax sale was close to the value of the property.  He decided after consulting with me that he would not fight the tax sale but would just accept the excess proceeds over and above what was necessary to pay the taxes which are paid to the purchaser by the Tax Claim Bureau after any liens on the property are paid in full.

If at all possible, one should always try to avoid the tax sale even if you need to file bankruptcy before the tax sale to do so.  However, if you lose your property at tax sale the important thing is to retain an attorney who knows tax sale law as soon as possible after the tax sale and retain him or her to file a petition to overturn the tax sale.  If the Tax Claim Bureau clearly did not follow the mandate of the statute then sometimes the buyer will simply agree to overturn the sale without any payment being required.  The more normal result is if I am able to find a defect in the Tax Claim Bureau’s process for conducting the tax sale then the case will settle for a lower amount.

However, I had another sale in 2023 where my client was served and knew about the tax sale and had absolutely no defense.  However, we were still able to settle the matter but just had to pay a lot more money.  My client still was able to save several hundred thousand dollars in equity in her property that she would have lost if the tax sale had just been allowed to proceed.  

The sooner you contact me after the tax sale, the better chance I will have to overturn the tax sale.  

Michael G. Louis is Chair of MacElree Harvey’s Banking and Finance Litigation Practice. He has extensive experience defending clients in tax sale cases, mortgage foreclosures, collections and loan workouts, general counsel work and real estate litigation, including landlord-tenant litigation. In addition to practicing civil litigation as referenced above, Michael does bankruptcy for creditors. To learn more about Michael, visit macelree.com/attorney/michael-g-louis, call 610-840-0228, or email [email protected].