A property tax ruling in Pennsylvania caught a lot of attention; here is USA Today:
Pa. judge upholds sale of widow's home over $6 tax bill
A Pennsylvania county judge has again ruled against a widow who lost her home because of an unpaid $6.30 interest charge for paying her school taxes late.
Beaver County Common Pleas Judge Gus Kwidis ruled that Eileen Battisti, of Aliquippa, was properly notified about the September 2011 tax sale of her home, which was valued at about $280,000 and sold at auction for $116,000. The decision last Tuesday followed an evidentiary hearing ordered by a higher court, which last April overturned his earlier ruling upholding the sale.
Battisti, who still lives in the house, told the Associated Press on Monday that she would appeal.
"I paid everything, and didn't know about the $6.30," she said. "For the house to be sold just because of $6.30 is crazy."
Crazy? Yes indeed. My hazy impression, as a long time American citizen, is that the law looks for materiality and proportionality in determining crimes and attaching penalties. When the punishment doesn't fit the crime, Something Is Done.
And that hazy impression finds support in the earlier ruling:
In denying Taxpayer’s objections without an evidentiary hearing, the trial court denied Taxpayer due process. In Geier v. Tax Claim Bureau of Schuylkill County, 527 Pa. 41, 588 A.2d 480 (1991), our Supreme Court emphasized that due process under both the United States and Pennsylvania Constitutions must be satisifed whenever the government subjects a citizen’s property to forfeiture for nonpayment of taxes. Accordingly, “a taxing authority’s strict compliance with the tax sale law does not necessarily satisfy the demands of due process.” Geier, 527 Pa. at 46, 588 A.2d at 483.
There are hurdles and procedural roadblocks but eventually (IMHO) she will be allowed to seek equitable relief in the courts and this farce will end with the woman keeping her home and the tax-sale shark who was looking for a quick score going away to annoy someone else.
The earlier ruling and press coverage gives lots of detail on how we reached this mess:
Battisti paid her 2008 Center Area School District taxes six days late. Though she paid the balance in full, she did not pay an additional $6.30 interest fee for the late payment by a May 1, 2009, deadline.
Battisti's attorney, Ed Santillan, said his client, a widow, never received notice of the interest fee for the late payment.
But Kwidis ruled "there is no doubt" Battisti was notified of the proposed sheriff's sale. He said she acknowledged receipt of a certified mail notice onJuly 7, 2011, and she was served a notice on Aug. 16, 2011, by a sheriff's deputy. The property was sold on Sept. 12, 2011.
Battisti's house had been paid off with life insurance money she received after her husband, Anthony Battisti, passed away in 2004, Santillan said. The couple bought the home in 1999.
Battisti paid her taxes in full in 2008 and 2009, according to the court's written opinion, but the $6.30 in unpaid interest from 2008 had grown to $255.84 at the time of the sale.
Well, I would be delighted to have a chat with whoever gave her the advice to pay off her entire mortgage. Although the mortgage rate is probably higher than whatever she was earning on her money market savings, this woman would have benefitted from a hefty rainy-day fund. And as of 2004, with the previous recession recently ended, was a future downturn so hard to imagine? As she now has learned, paying off the mortgage does not mean she owns the house, since there is an ongoing tax liability owed to an insane clown posse. Grr. But I digress.
Per the ruling, both the late fees and the widow's confusion were compounded by the taxing authority's slack bookeeping:
In April of 2010, Beaver County and Central Valley School District notified the Tax Claim Bureau of 2009 unpaid taxes on the Property. The unpaid Beaver County tax was $1,184.37 and a $118.44 penalty; the unpaid Central Valley School District tax was $2,324 and a $116.09 penalty. On June 3, 2010, the Tax Claim Bureau notified Taxpayer that she owed $3,832.71 for her 2009 real estate taxes, including interest and costs. On July 2, 2010, the Tax Claim Bureau sent a certified notice to Taxpayer that added interest, raising the total to $3,990.03. On September 11, 2010, the Tax Claim Bureau received a check from Taxpayer in the amount of $3,990.03, and it was applied to Taxpayer’s 2009 county and school taxes.
There remained an unpaid balance of $234.72 for the 2008 school taxes. This amount was based upon the $6.30 interest imposed when the tax payment was six days late and then grew with accruing interest and costs. On September 12, 2011, Taxpayer’s Property was sold at an upset tax sale for collection of the unpaid balance of $234.72 owing on Taxpayer’s 2008 school taxes.
So the poor woman had the silly idea that by paying what she was billed in 2009 she was settling her debt. Her bad!
As noted, she is appealing; she has been allowed to stay in her home pending appeals, and eventually a court will toss this out.
FWIW: My inner pedant can't rest without noting that, although her home maybe worth $280,000 today (Zillow say $290K, in a town with a median home price of $59K), the tax sale took place in Sept 2011, before the full fire of the Obama recovery was raging.
Again per Zillow, her home would have been worth roughly $250K in Sept 2011. That said, here are some homes in nearby towns that actually sold in Sept 2011 (1,2,3). The *estimated* value increases are $50K, $80K, and $50K respectively. By that criteria, the tax sale at $116,000 was a total rip-off.
YES, TAX-SALE SHARK: I don't think this is The House of Sand and Fog. The buyer was in court from the jump, filing motions to sustain the sale; I would say his interest in an equitable resolution is zero:
Battisti’s lawyer Ed Santillan said his client would lose about $200,000 in equity if she accepts the sale proceeds and that she wants to keep her home. Battisti said Lewis, the new homeowner, has offered to return it to her for a “ridiculous” $260,000.
IN LITIGATION: The USA Today piece ends with this:
Tax records show that as of last week she has an outstanding balance of more than $20,000, including penalties and interest, for county, municipal and school taxes from 2009 to 2013.
"She" has a balance? That is far from clear, which means the suggestion that she is a bit of a deadbeat is off base; the helpful link they provide advises us that the status of the tax bill in "in litigation". If it is eventually decided that the buyer owned the house as of Sept 2011, I doubt she will be found liable for the 2012 and 2013 taxes.
We do glean this clue from another story:
In his six-page order, the judge said the former homeowner is entitled to $108,039 in proceeds from the sale after her tax obligations are met.
The reported sale price was $116,000. Her unpaid balances from 2010 and 2011 are roughly $5K per year, so the numbers don't quite mesh, but they're close.