If one wishes to take advantage of his right to redeem a piece of real estate subsequent to a sheriff’s sale, it is critical to act in a timely manner, otherwise one may miss the opportunity to do so.
53 P.S. Section 7293 lays out the time line to take action in redeeming a property; however, there was some ambiguity in precisely interpreting just when the deadlines occur. The Court, in the recent matter, and case of first impression, Brentwood Borough School District v. HSBC Bank USA, 111 A.3d 807, helped clarify some of the aforesaid ambiguity.
In Brentwood, Defendant HSBC is the mortgagee on a property which was sold at sheriff’s sale to a third party called Grove Properties, Inc. due to delinquent taxes. Within about five months, HSBC filed to redeem the property pursuant to 53 P.S. Section 7293(a). According to 53 P.S. Section 7293(a), a party must file to redeem a property within nine months from the date of the acknowledgment of the Sheriff’s Deed which conveys a property following a sheriff’s sale. The trial court ruled against HSBC on this issue, asserting that HSBC only had ninety days to file to redeem, however on appeal the Commonwealth Court realized the trial court mistakenly applied the time line laid out in 53 P.S. Sections 27101-27605, and reversed the ruling of the trial court and confirmed the nine month time period.
The primary issue the Court focused upon was whether the property was vacant pursuant to 53 P.S. Section 7293(c), which made the case one of first impression. Section 7293(c) states that “there shall be no right of redemption of vacant property by any person after the date of the acknowledgment of the sheriff’s deed therefor.” Defendant argued that the property was not vacant because the occupant of the property at issue only temporarily stayed at her friends’ house to save money. She also left her belongings at the subject property. Based on the above, the Defendant asserted that, at most, the occupant of the property was only temporarily absent from it, which does not constitute its vacancy, as a property cannot be vacant if its occupant intends to return. In support of its argument, Defendant cited to how the term “occupied” is used in other cases and statutes.
The Court ruled that the term “occupied” must first be interpreted in the context of the Municipal Claims and Tax Liens statute (i.e.: 53 P.S. Section 7101 et seq). Pursuant to that statute the occupancy must be as a residence and not as a storage unit. Per the Court, the purpose of the statute is to increase the collection of taxes and to free land to bear its share of the tax burden. As a result, the Court reasoned, the statute must be interpreted to take consideration of the ability of the municipality to convert a house sold at sheriff’s sale back to productive use as quickly as possible. Therefore, the Court deduced that the legislature intended the redemption period should be brief which, in this case, is nine months’ time.
The Court observed that “occupied” is a factual determination to be made and applied on a case-by-case basis. The factors to consider in looking at a case include: “whether anyone was habitually physically present at the property, i.e., regularly sleeping and eating there and using it as a place to dwell; whether any lack of physical presence was due to temporary illness, travel or renovation; whether the property was unsecured, damaged or uninhabitable; and whether the basic and necessary utilities such as water, electric and gas were operational.” The instant matter revealed a property which had no person habitually present in it before the sale. It had no running hot water or gas and, therefore, no means to bathe or cook, essentially making it uninhabitable. Further, it also revealed that the occupant simply could not afford to reside at the property any longer. As a result, the Court resolved that the property was unoccupied. As the property was unoccupied, Defendant could not redeem the property after the date of the acknowledgment of the sheriff’s deed under the statute.
In light of the above, Defendant argued that disallowing them from redeeming the property was unjust as it “could not reasonably be deemed to be on notice that while [the occupant] kept all her belongings at the Property and frequently returned to the Property that she would later claim that she did not reside there anymore, and Defendant would suddenly be precluded from redeeming its interest in the Property.” The Court was not convinced. The Court was satisfied that the Defendant received all required statutory notices under the applicable law.
In sum, the Court ruled that the statute at issue is designed for a speedy and efficient process to return a property sold at sheriff’s sale to productive use and a property with no working utilities and no one physically inhabiting the property is vacant (or unoccupied) despite the occupant’s intention to move back in or leaving her belongings in the property.
Originally published on October 3, 2017 in Upon Further Review and can be viewed here.