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Volume 8 - Opinions of Counsel SBEA No. 124

Opinions of Counsel index

Tax sales (deed cancellation) (limitations of time) - Real Property Tax Law, § 1020:

The limitations on the time within which an action may be commenced to cancel a tax deed do not begin to run until such time as the delinquent taxpayer or other person having a substantial interest in the real property has received the notice required by due process of law.

Questions have been raised regarding redemption of properties subject to tax sales and cancellation of tax sales.

We are first asked whether there is a limitation of time within which a mortgagee, not given appropriate notice of a tax sale, may initiate proceedings to set aside the sale. In Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983), the U.S. Supreme Court held that a reasonably identifiable mortgagee, whose lien interest is a matter of public record is entitled to personal notice of a pending tax enforcement proceeding either in the form of mailing or actual personal service.

Subdivision 3 of section 1020 provides the general limitation of time within which to bring an action to cancel a tax sale. {1}  The conveyance by the county treasurer is “presumptive evidence” that the sale and all proceedings leading up to it were in accordance with law. Two years after the recording of such conveyance, the presumption is conclusive, subject to certain exceptions, including:

that any such conveyance shall be subject to cancellation by reason of * * * (c) any defect in the proceedings affecting jurisdiction upon constitutional grounds, if application is made to a court of competent jurisdiction within five years from the expiration of the period allowed by law for the redemption of lands sold at the particular sale sought to be cancelled. (Emphasis added)

Failure to personally notify a mortgagee of record of a pending tax enforcement proceeding clearly affects jurisdiction on constitutional grounds, given the Mennonite decision. Giving consideration to this statute only, therefore, a record mortgagee who has not received appropriate notice would have five years from the expiration of the period of redemption {2} to begin an action to set aside the sale (RPTL, § 1020(3)). However, in the counties of Orange, Rockland and Ulster, an individual has only two years from the recording of the tax deed to file a notice of pendency and commence an action to cancel the tax sale (RPTL, § 1020(4)), by virtue of a 1969 amendment to section 1020(4) (L.1969, c.857). The period of limitation within which to commence a judicial proceeding to cancel a tax sale, therefore, varies depending on the property’s location.

We believe that the same limitations would apply to a property owner where no notice to redeem was sent at least fourteen days prior to the publication (RPTL, § 1014(3)). In 1985, the Appellate Division, Second Department held that property owners might redeem beyond the statutory period where a county fails to strictly comply with the requirement that notice to redeem be sent at least fourteen days prior to publication. In Mastronardi v. Mitchell, 109 A.D.2d 825, 486 N.Y.S.2d 762 (2d Dept. 1985), Suffolk County had published prior to mailing notice to property owners, contrary to RPTL, section 1014(3). The mailed notice was “returned as undeliverable”, and the county contended that, therefore, the RPTL time requirements regarding mailed notices could be disregarded. The court rejected this argument.

However, the issue is complicated by two other factors. One involves the imposition of a statute of limitations on a right protected by the U.S. Constitution; the other is the application of the Mennonite decision.

The rule in this State appears to be that a statute of limitations may run against a remedy to enforce a right - even a right protected by the Constitution, for example, as compensation for a taking of private property in eminent domain proceedings (see, Rexford v. Knight, 11 N.Y. 308 (1854); see also, People ex rel. Chedsey v. City of New York, 105 Misc. 119, 172 N.Y.S. 644, 647 (S.Ct., Bronx Co., 1918)). However, this rule is not an absolute. First, the statute must allow a reasonable time for the enforcement of the right (Gilbert v. Ackerman, 159 N.Y. 118, 124 (1899)), and second, there are a number of cases which state that the statute of limitations does not begin to run until the person to be affected receives adequate notice of the possible termination of his right(s) (i.e., minimum due process) (Doud v. Huntington Hebrew Congregation, 178 App. Div. 748, 165 N.Y.S. 908 (2d Dept. 1917)).

For example, in Peterson v. Martino, 210 N.Y. 412 (1914), the plaintiffs sought to have the court void a tax deed to their property, claiming that the description in the deed was so inadequate as to constitute no notice at all. The defendants raised the five year time limitation of then section 132 of the Tax Law (now RPTL, § 1020(3)). The Court of Appeals agreed with the plaintiffs that the description was so vague it “might as well have been a deed without any description whatever” (210 N.Y. at 420). The Court went on to say:

Section 132 of the Tax Law was intended as a statute of limitations. [Citation omitted.] To set the statute running there must be some notice to the landowner that his title is to be divested . . .

* * *

Since the record of such a deed gave the plaintiff no warning of the sale, their right to cancel the assessment was unaffected by the statute.

(210 N.Y. at 420-421).

In a subsequent case, the Court reaffirmed this position. In Matter of City of New York (Grand Boulevard and Concourse), 212 N.Y. 538 (1914), at issue was the validity of a statute which purported to divest property owners of certain property rights (viz., private easements in what had been public streets) or compensation for those rights, six years after the filing of a city map which omitted those streets from the grid of public thoroughfares. The Court declared:

[T]he statute must be pronounced invalid. It takes the property of the citizen without actual notice, and without such provisions for constructive notice as are essential to the maintenance of due process of law.

* * *

Before the citizen’s right to compensation can be cut off by such a statute of limitation, notice of the event on which the right depends must be brought home to him by the State. He cannot be charged with the duty of hunting out the facts for himself.

(212 N.Y. at 543-544). {3}

Of course, at the time these cases were decided, the general rule was that constructive notice could serve as an adequate substitute for actual notice under such circumstances. That rule was changed by the 1950 decision of the U.S. Supreme Court in Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, as applied most recently to tax enforcement proceedings in Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983). Although Mullane and Mennonite changed the type of notice required to satisfy due process, it seems clear to us that their only affect on the rule laid down in cases such as Peterson v. Martino, supra, is to require notice by mail or by personal service rather than published or constructive notice of the pendency of any proceeding to divest a person of a property right, before any statute of limitations against enforcement of such right will begin to run.

In the context of section 1020(3) and (4), then, it is our opinion that the limitations of time will not run as against persons having an interest in the tax deeded property unless or until such time as they have received the notice to which they are entitled under the United States Constitution.

May 29, 1986

{1}  Counties may enforce delinquent taxes as provided in Article 11 of the RPTL. There, a mortgagee is statutorily entitled to notice of a tax sale only when he has filed a request for the same with the office of the tax district (RPTL, § 1126). Article 14 of the RPTL, applicable to tax sales by villages, requires notice by publication only (RPTL, § 1452).

The latter is clearly insufficient to satisfy due process, and with respect to the former, the Appellate Division, Fourth Department has concluded that a comparable provision of the Erie County Tax Act is constitutionally infirm (see, Matter of Foreclosure of Tax Liens by Erie, 103 A.D.2d 636, 481 N.Y.S.2d 547 (4th Dept. 1984)).

{2}  Section 1018 of the RPTL authorizes the conveyance of the tax deed following the generally applicable period of redemption which is one year from the last day of the tax sale (RPTL, § 1010). Where the property is mortgaged, section 1024 provides an additional two year period of redemption which may be reduced to 6 months upon filing evidence of proper notice to the mortgagee. A tax deed issued pursuant to section 1020 is subject to this extended redemption period.

{3}  To the same effect, see: Scheibel v. Burr, 192 App.Div. 438, 183 N.Y.S. 49 (2d Dept. 1920); People v. Prime, 199 App.Div. 272, 191 N.Y.S. 643 (3d Dept. 1921); Bryan v. McGurk, 200 N.Y. 332 (1911); Dodd v. Boenig, 114 Misc. 144, 186 N.Y.S. 116 (S.Ct., Nassau Co. 1921). To the extent that Taccone v. DiRenzi, 92 Misc.2d 786, 401 N.Y.S.2d 722 (S.Ct., Ontario Co. 1978) suggests a different rule, we think it is simply wrong.