Buying land at a Pennsylvania tax sale

Section 304 divests the lien of taxes and municipal claims included in the upset price, and only if the purchase money is at least equal to the Commonwealth tax liens with priority under section 205, all taxes due, all municipal claims certified under section 605, and the costs of sale. Section 609 then saves every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in that price. Section 605 builds the upset price out of Commonwealth tax liens, the claim absolute and interest, other tax claims and judgments, accrued taxes, municipal claims and costs, so a mortgage is never inside it and never divested here. Order a title search before bidding, and treat the upset price as the floor rather than the total cost of the parcel.

Who runs it. Every county except Philadelphia and Allegheny. This is the sale most parcels are offered at first. Section 601(a) has the bureau schedule it no earlier than the second Monday of September and before October 1, and it may be adjourned, readjourned or continued without new notice as long as it is held by the end of the calendar year.

Section 612(a) orders the property sold freed and cleared of all tax and municipal claims, mortgages, liens, charges and estates, except separately taxed ground rents, and the purchaser takes and thereafter has an absolute title free and clear of all tax and municipal claims, mortgages, liens, charges and estates of whatsoever kind, except ground rents, separately taxed. One carve-out, and it is a ground rent.

Who runs it. Every county except Philadelphia and Allegheny, after a parcel failed to draw the upset price. Section 616 makes the petition mandatory: once 10 months pass with no section 610 petition and no private sale, the bureau must file within the next two months.

The section 613 notice states that the property will be sold free and clear of all tax claims and tax judgments, and the section 615 deed conveys title free, clear and discharged of all tax claims and tax judgments, whether or not returned, filed or entered. Neither section names mortgages, municipal claims, charges or estates, which sections 612 and 627(b) both name. No section states the consequence for those interests at a private sale, so treat a section 613 parcel as encumbered until a title search says otherwise and see unknowns.

Who runs it. The bureau may sell privately at any price it approves after a failed upset sale, on its own motion or on the written instruction of a taxing district. Interested parties have 45 days to petition the court to disapprove the price.

Same reach as the judicial sale, same single carve-out. This is the rung a cheap rural lot most often sells from, and it is the cleanest title on the ladder.

Who runs it. Property still unsold after a judicial sale goes into the repository for unsold properties, whose list the bureau keeps open to the public. The bureau may accept any offer at or above a minimum price with the written consent of all taxing districts, without court approval and without published notice.

Section 31 states that mortgages, ground rents and other charges on or estates in the property which were recorded, or created where recording is not required, before any tax other than for the current year accrue, or before the actual doing of the work for which the municipal claim is filed, shall not be disturbed by such sale unless a prior lien is also discharged thereby. The same section adds that a sale on one tax or municipal claim does not discharge the lien of any other, except to the extent the proceeds reach it after costs and prior claims.

Who runs it. Philadelphia and Allegheny, the two counties the Real Estate Tax Sale Law does not reach, plus any municipality statewide enforcing a municipal claim.

All property at sheriff's sale shall be sold clear of all claims, liens, mortgages, charges and estates to the highest bidder, and the purchaser shall take and forever thereafter have an absolute title free and discharged of all tax and municipal claims, liens, mortgages, charges and estates of whatsoever kind, subject only to the right of redemption as provided by law. That redemption right is the difference from a Real Estate Tax Sale Law judicial sale, and section 32 supplies it.

Who runs it. A claimant that exposed the property and could not obtain a bid sufficient to pay the upset price petitions the court, which rules all recorded parties to show cause. Section 31.2 is the parallel petition route, and section 31.2(a) opens it to cities of the first or second class and counties of the second class and any municipalities therein, which is the clause that reaches Allegheny County itself rather than only the City of Pittsburgh.

Section 307(b) states that title issued under this act shall be equivalent to that acquired at sheriff's sale, which routes the question back to Municipal Claim and Tax Lien Law section 31, so the answer turns on whether the sale was an ordinary one or a free and clear decree. Section 304 gives 90 days to redeem after the treasurer's sale, and a redeemer also pays 15 percent of the total purchase price over to the divested purchaser.

Who runs it. Cities of the second class, which is Pittsburgh.

A mortgage survives an upset sale, because section 609 conveys title under and subject to the lien of every recorded mortgage not included in the upset price and section 605 builds the upset price only out of Commonwealth tax liens, tax claims and judgments, accrued taxes, municipal claims and costs, so a mortgage is never in it. A mortgage is divested at a judicial sale, which section 612(a) names expressly, and at a repository sale, which section 627(b) names expressly. At a private sale the section 615 deed discharges tax claims and tax judgments and does not name mortgages at all.

At an upset sale it plainly survives, because section 609 saves every recorded lien not included in the upset price and a notice of federal tax lien is a recorded lien. At a sale that attempts divestiture, 26 U.S.C. 7425(b)(1) makes the sale subject to and without disturbing the federal lien where notice of that lien was filed more than 30 days before the sale and the United States was not given notice of the sale in the manner set by 26 U.S.C. 7425(c)(1). That notice goes to the Secretary in writing, by registered or certified mail or by personal service, not less than 25 days before the sale.

Section 605 makes it the duty of every taxing district and municipal authority holding a municipal claim to certify the amount to the bureau by August 30 of the sale year so it enters the upset price, and section 304 then divests the lien of taxes and municipal claims included in that price once the purchase money reaches the statutory floor. A claim that is certified and covered is gone. A claim that is neither falls under section 609 and rides through the upset sale with the buyer.

At an upset sale a recorded association lien survives: section 609 saves every recorded obligation, claim, lien, estate, mortgage, ground rent and Commonwealth tax lien not included in the upset price, and an association assessment is not one of the six components section 605 builds that price from. At a judicial sale under section 612 and a repository sale under section 627(b) it is divested, because both sweep all liens, charges and estates of whatsoever kind with a single carve-out for separately taxed ground rents.

The Real Estate Tax Sale Law was searched in full and contains zero occurrences of easement, covenant and servitude; the Municipal Claim and Tax Lien Law contains zero occurrences of easement and covenant. Neither act carves an easement out of anything, and neither preserves one.

No Pennsylvania statute read here says what a tax sale does to a recorded restrictive covenant, and the sweep clauses in sections 612(a) and 627(b) would read against survival on their face.

Section 612(a) sells freed and cleared of everything except separately taxed ground rents and gives the purchaser absolute title except ground rents, separately taxed. Section 627(b) repeats the carve-out for a repository sale. Section 609 lists ground rent among the interests an upset sale is subject to, so it survives there as well.

Section 609 saves a Commonwealth tax lien not included in the upset price, so it survives an upset sale unless it was bought out. Section 605(a) puts Commonwealth tax liens first among the six components of the upset price, which is how a bidder buys them out.