New York Court Of Appeals: No Due Process Violation Where Municipality Fails To Give Property Owners Notice Of Buyback Rights In A Tax Lien Foreclosure Sale

On February 21, 2012, New York state's highest court unanimously refused to extend due process protection to property owners challenging a tax lien foreclosure sale on grounds that they did not receive notice of their repurchase rights. Consequently, New York property owners, who were unapprised of their repurchase rights, will be unable to challenge the foreclosure on that basis. In Matter of the Foreclosure of Tax Liens by Proceeding in Rem Pursuant to Article Eleven of the Real Property Tax Law, by Orange County Commissioner of Finance v. Helseth, 2012 NY Slip Op 01324 (Ct. App. Feb. 21, 2012), the Court of Appeals held that a couple's due process rights were not violated when Orange County took possession of their two-acre lots without informing the couple directly of the opportunity under a local law to repurchase the property "back from the County through the release of the County's interest" (the "release option"). Id. at *2.

Defendant-property owners, the Helseths, purchased a four-acre parcel of land in Orange County in 1997. They subdivided the parcel into two-acre lots and constructed a home on one of the lots, while the other lot remained unimproved. In 2000, the Helseths sold the lot with the house and relocated to an apartment on Amity Road. The Helseths relocated again in 2002, and placed the unimproved lot for sale. In 2004, the Helseths learned that they were still receiving mail at the Amity Road address, including a real property tax bill. The Helseths made two attempts to correct their address with the county: (1) filing a change of address form and (2) directly informing the Orange County Commission of Finance. Starting in 2006, the Helseths stopped paying taxes on the unimproved lot, and that November, the county filed a list of delinquent tax parcels that included the property. In October 2007, the county commenced a tax lien foreclosure on the property. The county gave notice of the foreclosure action by (1) publishing the notice in five newspapers for three nonconsecutive weeks over a two-month period; (2) posting the notice at offices of the Department of Finance, the Orange County Clerk, and the Orange County courthouse; and (3) mailing the notice by regular first-class mail and certified mail to the Helseths' prior Amity Road residence.

The Helseths did not answer, exercise their redemption right, or otherwise appear in the foreclosure action, resulting in a default judgment of foreclosure, which conveyed title...