Skip to main content

Volume 6 - Opinions of Counsel SBEA No. 52

Opinions of Counsel index

Taxes (delinquent) (county tax deed - extinguishment of liens and encumbrances) - Real Property Tax Law, § 1020:

Issuance of a county tax deed vests in the grantee an absolute estate in fee and divests holders of competing liens and encumbrances of any right, title of interest in the property they may have otherwise held. This is so whether the other liens are held privately or by a municipality.

A question has been raised as to the effect of a county acquisition of title to real property by tax deed upon a pending judgment lien against certain real property. Pursuant to court order, the judgment lien was to have been collected and enforced “in the same manner as other taxes are collected by law.”

The parcel in question was improved with buildings which the town board had concluded were unsafe and dangerous and which they found constituted a public nuisance. In accordance with all requirements of law, the town board had notified the property owner that the property should be made safe and secure or removed. The owner having neglected and failed to comply with the notice, the town board obtained a judicial order compelling the demolition of the improvement and the imposition of the costs upon the property owner (see generally, Town Law, § 130(16)). Judgment was entered on July 5, 1974.

Prior to that time, the property had become tax delinquent and the county had “bid in” the lien against the parcel (see, Real Property Tax Law, § 1008(3)). The period of redemption ran and the county executed a deed taking title to the property on December 27, 1976. The town, meanwhile, had been unsuccessful in its attempts to collect the judgment against the owners of the real property and sought to have the amount considered as part of the charges against the property to be entered on the 1977 tax roll.

Section 1020 of the Real Property Tax Law is unambiguous in its terms upon the issuance of a county tax deed. All pending liens and encumbrances, with certain limited exceptions, are extinguished. Subdivision 1 of that section provides that a conveyance by the county treasurer of a tax deed vests in the grantee (in this case, the county) an absolute estate in fee subject only to county or state claims for taxes, liens or other encumbrances. (Certain other exceptions are not relevant to our consideration here.) This section is consistent with the general rule of law that the purchaser at a tax sale takes title free and clear of existing liens on the land, and this rule applies to attachments, judgments, or execution liens (see, 84 C.J.S., Taxation § 596). Section 1020 makes the tax lien paramount by law and thus, subject only to the exceptions noted, the purchaser acquires a clear and unencumbered title without regard to the number and variety of liens, charges and encumbrances (see, e.g., 55 St. Dept. 6 (Dept. of Taxation & Finance)).

The distinction suggested in earlier judicial decisions distinguishing between so-called private liens and sovereign liens (see, e.g., Riverhead Estates Civic Ass’n v. Gobron, 206 Misc. 405, 134 N.Y.S.2d 13; and Segar v. Youngs, 58 A.D.2d 368, 396 N.Y.S.2d 912, rev’d, 45 N.Y.2d 568, 383 N.E.2d 103, 410 N.Y.S.2d 801) has been rejected by the Court of Appeals (see, Segar v. Youngs, supra). In the latter case, the Court held that section 1020 allowed no general exception for municipal tax liens, and, therefore, issuance of a county tax deed extinguished even a municipally-held village tax lien. Since, as a general rule, tax liens take priority over all other types of liens (see generally, 16 McQuillin, Municipal Corporations (3 Ed.), § 34.142), we can only conclude based on the Segar case, that since a tax deed issued by the county extinguishes a pre-existing municipal tax lien, it would also extinguish a pre-existing municipal judgment lien.

April 17, 1979

NOTE: Effective July 13, 1979, section 1020 was amended to provide that a conveyance by the county treasurer pursuant to section 1018 is subject to village, town and city claims for taxes, liens or other encumbrances (L.1979, chs. 700, 701).  This Opinion construes law prior to L.1979, chs. 700, 701.