Improper redemption notice divides COA in tax deed case

A divided Indiana Court of Appeals affirmed that the inclusion of an overbid in a tax-sale purchased home’s redemption amount was misleading, but the majority still ultimately offered a second chance for a proper notice to be sent.

After a South Bend home owned by Verna McIntosh became delinquent in its property taxes, a tax-sale certificate was purchased for the property by St. Joseph County and assigned to Pinch-N-Post LLC. A notice pursuant to Indiana Code section 6-1.1-25-4.5 was then sent to McIntosh that included the sums of money required for redemption of the property, totaling more than $9,500. The judgment at the time of tax sale, however, was just $4,072.71.

McIntosh did not redeem the property in time, and Pinch-N-Post then petitioned for a tax deed of the property. Its petition was denied, however, when the trial court concluded the 4.5 notice contained “flawed numbers which greatly inflated the amount of money it would take for [McIntosh] to redeem the property” and concluded that it therefore did not substantially comply with the applicable statutory provisions. Pinch-N-Post thus received a refund for $4,679.29.

On appeal, the Indiana Court of Appeals agreed with McIntosh in Pinch-N-Post, LLC v. Verna L. McIntosh, 19A-TP-00239, that the 4.5 notice failed to substantially comply with the relevant statutes.

“Put simply, the 4.5 Notice explicitly listed the $4679.29 overbid as a component of the redemption amount — which is simply not true — an inclusion likely to create the false impression that the cost of redemption was far higher than it actually was,” Judge Cale Bradford wrote for the majority joined by Judge Terry Crone. “It is difficult to escape the conclusion that this was the whole point, as there is nothing anywhere in the relevant statutes that even remotely justifies including the overbid in the redemption amount.”

The majority was thus unconvinced that item 7(h) cured the highly misleading inclusion of the overbid in the redemption amount. It concluded that the 4.5 Notice asked McIntosh “to jump through too many hoops” to discover the true redemption amount and that the trial court’s ruling in that regard was not clearly erroneous.

However, the majority concluded otherwise regarding the trial court’s order to return the overbid to Pinch-N-Post. It found the trial court erred in voiding the underlying tax sale of the property and thus remanded with instructions to order a new 120-day redemption period, with 4.5 Notice to be given not later than 90 days after the order.

In a separate opinion, Judge Elizabeth Tavitas agreed with the majority’s analysis that Pinch-N-Post failed to provide a proper 4.5 Notice but parted ways with the majority regarding the impact of the improper 4.5 Notice.

“The majority agrees that the 4.5 Notice was inadequate but allows Pinch-N-Post a second chance to send a proper 4.5 Notice. I conclude that, under Indiana Code Section 6-1.1-25-4.6(j), Pinch-N-Post is not entitled to such a second chance,” Tavitas wrote in her dissent.

“… The General Assembly recognized that the provision of a misleading 4.5 Notice warranted a significant penalty — the return of none of the purchase price. I see no reason why the tax sale would not be voided in this circumstance as well.”

Tavitas opined that while she would affirm the trial court’s judgment regarding the inadequacy of the 4.5 Notice, she would instead reverse its award of the tax sale surplus to Pinch-N-Post and remand for the trial court to void the tax sale.

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