COA: Questions remain whether proper notice given after tax sale

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The Indiana Court of Appeals, citing several questions of fact in a case involving a tax sale, affirmed denial of summary judgment for a mortgagee that sought to set aside the issuance of a tax deed.

WM Specialty Mortgage LLC issued a mortgage to Raymond Gresham on real estate in English, Ind. At issue is a 4.5-acre tract of land in which WM foreclosed but never was put through a sheriff’s sale. Due to delinquent property taxes, the land went through a tax sale, at which Marcus Burgher purchased it.

He sent notice of the sale and the right of redemption, referred to as the 4.5 Notice, and notice of his filing for a tax deed, referred to as the 4.6 Notice, to the California address listed for WM in its foreclosure complaint and the address on record with the county. The 4.6 Notice came back as undeliverable. The trial court ordered the county auditor to issue the tax deed to Burgher, who later transferred title of the real estate to Darrell and Barbara Calhoun via a quitclaim deed. WM then filed a motion to intervene and sought to set aside the tax sale and tax deed.

WM at first argued the California address was not its correct address to mail the notice, but later conceded it was. WM then argued that it was entitled to summary judgment because Burgher couldn’t prove he mailed the 4.5 notice via certified mail and he should have taken additional steps once he learned WM didn’t receive the 4.6 notice. First American was later substituted as intervenor after WM assigned its rights to the company. The Calhouns were substituted in place of Burgher because he sold the real estate to them.  The trial court denied summary judgment for First American, and the case went before the Court of Appeals on interlocutory appeal.

First American had the burden to rebut the presumption of the validity of the tax deed, but instead moved for summary judgment, claiming that Burgher wouldn’t be able to prove he complied with statute. This is not enough to meet its burden on summary judgment, Judge Rudolph Pyle III wrote in First American Title Insurance Company v. Darrell Calhoun and Barbara Calhoun, Successors to Marcus Burgher III, for Issuance of Tax Deed, 13A01-1304-MI-177.

First American argued that its failure to update its address in the county records has no effect on the results of this case, citing Jones. In Jones, the Supreme Court of the United States held “that when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so.” But the Indiana Supreme Court has clarified that the additional steps the state must take specifically applies to pre-tax sale notice sent to property owners and not to a party with a substantial property interest, such as mortgagees, Pyle wrote.

The judges noted there are questions of fact regarding the constitutional adequacy of the 4.6 Notice and regarding the balancing of the parties’ interests as well as whether Burgher gave notice in a manner reasonably calculated to inform WM of the issuance of the tax deed. As such, the trial court properly denied WM Mortgage’s/First American’s motion for summary judgment.



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