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Volume 8 - Opinions of Counsel SBEA No. 125

Opinions of Counsel index

Tax sales (redemption) (attorney’s fees) - Real Property Tax Law, §§ 1002, 1022:

The amount necessary to redeem a parcel from a county tax lien sale does not include attorney’s fees of the tax certificate holder.

We have been asked whether attorney’s fees paid by the holder of a county tax sale certificate should be included in the amount which must be proffered for purposes of redemption, as one of the “other charges allowed by law with respect thereto” within the meaning of subdivision 5 of section 1022 of the Real Property Tax Law. We think the answer is clearly no.

A number of provisions in the RPTL authorize the imposition of “charges” or “expenses” arising out of the tax enforcement process as an additional cost against a tax delinquent parcel. For example, the published notice which precedes a county tax lien sale must include a statement of the “aggregate amount due on each parcel as of the time of sale” (RPTL, § 1022(2)). That amount includes taxes, interest “and the expense chargeable against the parcel” (id.).

The meaning of this last phrase may be determined from the preceding section 1000. Subdivision 1 of section 1000 requires the county treasurer to include as part of the amount to be advertised as unpaid “the share of expense of advertising and conducting the sale attributable to such parcel”. In construing predecessor provisions of the former Tax Law, the Appellate Division declared that “the manifest intention of the statute is that . . . [a]n individual is required to pay, as part of the unpaid tax, a proportionate share of the expenses of sale, including the expense of publishing the notice of sale” (Armstrong v. Nassau County, 101 App. Div. 116, 91 N.Y.S. 867, 869 (2d Dept. 1905)(emphasis added)).

Thus, these sections of the RPTL contemplate the imposition of costs related to the sale of the lien, that is, costs incurred by the county because the tax was not timely paid. {1}

There are other costs - also derived from the conduct of the sale - which are statutorily prescribed charges against the tax delinquent parcels. These include the cost of mailed notice prior to the commencement of a tax lien sale (§ 1002(4)), and the cost of mailed notice (§ 1014(3)) and published notice (§ 1014(5)) with respect to the pending expiration of the period of redemption prescribed by section 1010 of the RPTL.

As to the cost of redemption of occupied property, subdivision 5 of section 1022 refers to “any tax . . . with interest, penalties and other charges allowed by law with respect thereto” (emphasis added). In our opinion, this emphasized language is limited to those charges, specifically allowed by law, arising out of the expense of conducting the tax enforcement proceeding. In addition to the items previously described, what might these include?

The term may encompass the cost of the notice by certified mail and any associated filing costs now required by paragraph (b) of subdivision 1 of section 1022. However, that is not at all clear since, in contrast to comparable notice by mail provisions of sections 1002 and 1014, there is no specification in the statute that the expense is directly chargeable to the individual tax delinquent parcel. In the absence of such provision, costs of county government are ordinarily a general county charge (cf., § 1014(7)).

Also unclear is the status of costs incurred in the service (and filing evidence of such service) of the optional notice (§ 1022(2)) to reduce to six months the additional two-year period of redemption available in the case of occupied lands. This seems even less likely than the preceding cost to have been intended as a “charge allowed by law” with respect to the unpaid tax, as it is a statutory option rather than a mandate.

All of this, however, leads us to the conclusion that it would be a very strained interpretation to read the phrase “charges allowed by law” in section 1022(5), as including attorney’s fees voluntarily incurred by persons holding tax lien certificates. Had the Legislature intended such construction, we believe the statute would be far more specific. By way of comparison, see subdivision 12 of section 1116 of the RPTL, applicable to proceedings for foreclosure of a tax lien as in an action to foreclose a mortgage, where specific costs and disbursements payable to a plaintiff are set forth, as well as a fee for the referee for conducting the sale.

The general rule in New York is that in civil litigation, attorneys’ fees are not ordinarily recoupable by the successful litigant from the other party (e.g., Tucker v. Toia, 64 A.D.2d 826, 407 N.Y.S.2d 600 (4th Dept. 1978), and cases cited therein; cf., CPLR, § 8303). That is, “[attorneys’ fees are merely incidents of litigation and are normally not recoverable absent contractual obligation or specific statutory authority” (citation omitted) (Klein v. Sharp, 41 A.D.2d 926, 343 N.Y.S.2d 1014 (1st Dept. 1973)).

Clearly there is no contractual obligation involved here and, it is our opinion that just as clearly there is no statutory authority for imposing upon the person seeking to redeem pursuant to section 1022, attorneys’ fees incurred by the tax sale certificate holder. Those fees seem no more an expense or cost “allowed by law” than would be the cost of a survey or title search done at the behest of a would-be bidder on tax delinquent property, for the purpose of enabling such person to decide whether or not to bid on such property.

Finally, although there does not seem to be a great deal of case law anywhere in this regard, our opinion is consistent with the rule in those other states which have considered the matter. That is, unless the tax enforcement statute specifically includes attorneys’ fees and like charges as expenses chargeable to the tax delinquent parcel, such costs are not recoverable against such parcel and, therefore, not a cost of redemption. (Rather, these items are of a personal expense incurred by the tax certificate holder.) For example, see the following cases: Brooks v. Florida Home Mortgage Co., 165 So.2d 238 (Fla. 1964)(denial of costs for a title search and attorney’s fees to a tax certificate holder for services performed in foreclosing a tax lien certificate); Builder’s Lumber and Supply Co. v. Jordan Lands, Inc., 228 So.2d 359 (La. 1969) (“costs” included in amount needed to redeem, under Louisiana Constitution, did not include attorney’s fees incurred by holder of a tax sale certificate in affecting a redemption); Philadelphia v. Rutherford, 62 A.2d 122 (Pa. 1948) (“necessary expenses” did not include title insurance purchased by certificate holder, the court finding it had been purchased simply for the peace-of-mind of the lienholder.) {2}

Accordingly, it is our opinion that the phrase “other expenses allowed by law” in subdivision 5 of section 1022 of the RPTL does not include attorney’s fees incurred by the holder of a tax sale certificate, and, therefore, the amount necessary to redeem pursuant to that section is exclusive of such fees.

March 4, 1987

{1}  In the context of statutory provisions governing village tax sales — now RPTL, §§ 1452(1), 1454(1)-the State Comptroller has said the cost of services of an auctioneer hired by the village to conduct its tax sale is a proper charge against property in a tax enforcement proceeding (1948 Op. State Compt. No. 2874, unreported, cited in 12 Op. State Compt. 101). We agree and would extend this conclusion to a county tax sale, since such expense may be considered one arising out of the conduct of the sale.

{2}  There are, as noted, cases where attorney’s fees have been allowed or included as costs, but only where specifically authorized by statute. See, e.g., Fisher v. Harrington Co., 5 A.2d 785 (N.J. 1939); John Allan Co. v. Campbell, 365 N.E.2d 697 (Ill.. 1977); Higgins v. Montana Hotel Corp., 592 P.2d 930 (Mont. 1979).