On July 3, 2012, the Missouri Supreme Court released two opinions that clarify the procedure by which purchasers of tax certificates at the annual August sales may obtain deeds to the tax-delinquent property. Both cases illuminate section 140.405 of the Revised Statutes of Missouri with respect to the content and timing of notices (“redemption notices”) required to be sent to the delinquent taxpayer (and others, such as lienholders) so that the tax sale purchaser can obtain a deed to the property for which the purchaser has paid the delinquent taxes and received a “certificate of purchase” which I refer to here as a tax certificate. These new decisions apply to first-year sales and second-year sales, not third-year sales, which have different redemption rules.
Tag Archives: Tax sale
In the case of United Asset Management v. Clark, United lost its real estate in Cass County, Missouri, having failed to pay its taxes. If United hadn’t played hard to find, there’s a good chance that it would have received the notices from the county collector and from Clark, who bought the property at the collector’s sale.
This 40-page opinion of the Western District of the Missouri Court of Appeals adds detail to Missouri’s rapidly growing body of law that interprets the Jones-Munger Act, which is the collection of Missouri statutes that set out the procedure for collection of property taxes by counties through the advertisement and sale of delinquent real estate.
The Jones-Munger Act provides a period for a property owner to redeem property after somebody else has paid the taxes. The United States Constitution’s protection of property owners from confiscation without due process requires strict adherence to statutory procedures to assure that nobody loses their property without notice.
According to this opinion (and the precedents that it cites), when a county collector receives a tax statement that is stamped with “return to sender, undeliverable at this address, unable to forward,” the collector may be required to do more, rather than merely include the property in the collector’s sales, held in Missouri counties on the fourth Monday of each August.
Similarly, when the purchaser of a property at a tax sale applies for a collector’s deed, the purchaser must make a diligent effort to give notice to the property owner and any lienholders (such as those holding a mortgage on the property) that their redemption rights will expire.
Just what is required of the county collector and the tax sale purchaser depends on the circumstances, especially since the Jones v. Flowers decision of 2006, one of the first United Supreme Court opinions written by Chief Justice John Roberts. But Roberts wrote that the return of the envelope triggers a process that must be appropriate under the circumstances. For a tax collector or a purchaser of a tax certificate, it’s usually a good idea to:
- send a notice by regular mail, in addition to certified mail
- send a notice addressed to “occupant”
- knock on the door or post a notice, if there’s a building on the property
- look in the phone book or call directory assistance
- use an internet search engine
- check property tax records (including vehicle records) for another address for the same party
I’ve been able to persuade courts to set aside collector’s deeds when the purchaser at tax sale couldn’t demonstrate diligence.
But United Asset Management Trust Company was too hard to find, which might be desirable for one wanting to avoid paying taxes and other debts. But United paid a price for being elusive.
United was the trustee for Coast to Coast Holding Company, which had no address in the United States, but was domiciled in Grand Turk, Caicos, British West Indies. Somewhere along the line, its Missouri post office box was cancelled, with no forwarding address. United Trust’s manager was in another state. The Cass County Collector was diligent, but couldn’t locate United, Neither could Clark, who bought the property at the collector’s tax sale. There was no building on the property and nowhere to post a notice.
The appellate court agreed with the trial court. The county collector and the purchaser at the tax sale did all that was reasonable and practical under the circumstances created by United. So United lost its real property for a few dollars in taxes.