In re Upset Sale of Tioga County – Pa. Cmwlth. – November 6, 2023
Adequacy of Sale Price
Initially, “[g]enerally speaking, when a property owner is delinquent in paying taxes, an upset tax sale is conducted to recover the ‘upset price,’ which is the total sum of the taxes owed plus any tax liens and municipal claims[.]” In re Adams Cnty. Tax Claim Bureau, 200 A.3d 622, 623 n.1 (Pa. Cmwlth. 2018); see also Section 605 of the RETSL, 72 P.S. § 5860.605. Properties may be sold at an upset sale on bids equal to or greater than the upset price. See 72 P.S. § 5860.605 (“No sale of property shall be made by the bureau unless a bid equal to the upset price is made.”).
Additionally, even were we to assume that simply reaching a property’s approximate upset price does not necessarily prove the sufficiency of the price achieved in an upset sale, Pennsylvania courts have held that, in cases challenging tax sales on the basis of the adequacy of the sale price, the mere alleged inadequacy of the sale price, standing alone, is not a sufficient basis upon which to set aside the sale. See Mathias v. York Cnty Tax Claim Bureau (Pa. Cmwlth., No. 714 C.D. 2021, filed July 8, 2022), slip op. at 5 (citing first Allegheny Cnty. v. Golf Resort, Inc., 974 A.2d 1242, 1247 (Pa. Cmwlth. 2009), then Provident Nat’l Bank, N.A. v. Song, 832 A.2d 1077, 1081 (Pa. Super. 2006)).
While cases involving grossly inadequate sales prices typically involve sheriffs’ sales in mortgage foreclosure actions, the grossly inadequate price may also be examined as a basis to set aside tax sales where irregularities in the sale contribute to the grossly inadequate price. See Hart v. Bulldawg, LLC and City of Phila., Dep’t of Revenue (Pa. Cmwlth., No. 107 C.D. 2016, filed Feb. 14, 2017), slip op. at 7 n.5 (citing Allegheny Cnty., 974 A.2d at 1247-48).
In the sheriffs’ sale context, this Court has observed:
Where a tax sale is challenged based upon the adequacy of the price, our courts have frequently held that mere inadequacy of price, standing alone, is not a sufficient basis for setting aside a sheriff’s sale. Allegheny C[n]ty. [], 974 A.2d [at] 1247 [] (quoting Provident Nat’l Bank [], 832 A.2d [at] 1081[]). Where a gross inadequacy exists, however, courts have found proper grounds to set aside a sheriff’s sale, and each case is determined on its own facts. Id. “It is for this reason that the term ‘grossly inadequate price’ has never been fixed by any court at any given amount or any percentage amount of the sale.” Scott v. Adal Corp., [] 509 A.2d 1279, 1283 ([Pa. Super.] 1986)[]. In addition, a presumption exists that the price received at a public sale is the highest and best available. Blue Ball Nat’l Bank v. Balmer, 810 A.2d 164, 167 (Pa. Super. 2002), appeal denied, [] 820 A.2d 702 (Pa. 2003).
City of Phila. v. Hart, 224 A.3d 815, 822 (Pa. Cmwlth. 2020); see also Mathias, slip op. at 5-6. “Pennsylvania courts have concluded that a sheriff’s sale price is grossly inadequate where [the] sale price was a small percentage – roughly ten percent or less – of the established market value.” Bank of Am., N.A. v. Est. of Hood, 47 A.3d 1208, 1212 (Pa. Super. 2012) (collecting cases).
In the instant matter, the Property’s approximate upset sale price was $7,465.64 and the final sale price realized at the Upset Sale was $83,000. This realized sale price, therefore, represents more than 11 times the approximate upset sale price necessary to allow the Upset Sale to proceed to completion. See 72 P.S. § 5860.605. Additionally, the Property was assessed at $465,000. While there is no fixed percentage of amount of appraised value versus sale price that automatically constitutes a “grossly inadequate price,” the $83,000 sale price represents approximately 18% of the appraised value of the Property, or nearly twice the percentage of appraised value versus sale price that Pennsylvania courts have found to represent a “grossly inadequate price” in sheriffs’ sales. See Est. of Hood, 47 A.3d at 1212. Additionally, Appellant can hardly feign surprise that the Property’s final sale price represented only approximately one fifth the assessed value, where the Bureau expressly warned Appellant in the July 2021 Notice that the Property may be sold at the Upset Sale for a fraction of its fair market value. ... Based on this information, the Trial Court found no legal basis for awarding equitable relief based on the sale price. See Trial Court Opinion at 4. We find no error in the Trial Court’s determination. Hart, Mathias, Est. of Hood.
