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In the Matter of the Foreclosure of Tax Liens &C. By Orange County

February 21, 2012

IN THE MATTER OF THE FORECLOSURE OF TAX LIENS &C. BY ORANGE COUNTY COMMISSIONER OF FINANCE, APPELLANT; JEANETTE HELSETH, ET AL., RESPONDENTS.


The opinion of the court was delivered by: Jones, J.:

This opinion is uncorrected and subject to revision before publication in the New York Reports.

In December 1997, Jeanette and Ola Helseth (the Helseths) purchased a four-acre parcel of land located in the Town of Warwick, Orange County, New York. The parcel was subdivided into two-acre lots and a home, in which the Helseths resided, was constructed on one of the lots; the other lot remained unimproved (the property). In 2000, following the sale of the improved lot, the Helseths moved to an apartment on Amity Road; and in 2002, they relocated to Sandfordville Road, placing the property on the market for sale through a real estate broker.

In April 2004, after learning from the landlord of their former Amity Road residence that they continued to receive mail at that location (including a real property tax bill), the Helseths filed a change of address form with the Town of Warwick Assessor, indicating the Sandfordville Road address as their then-current address. Moreover, in September 2005, the Helseths paid that year's real property taxes at the Office of the Orange County Commissioner of Finance (the County), directly informing them of their Sandfordville Road address. Despite these attempts to amend their address for accurate reflection in the tax rolls, the Helseths did not receive any additional real estate property tax bills or correspondence. Indeed, according to the County, their records indicated that the Helseths resided at the prior Amity Road address.

Starting in January 2006, the Helseths failed to pay taxes on the property*fn1 and in November of that year, the County, pursuant to Real Property Tax Law § 1122, filed a list of then-delinquent tax parcels (which included the property). In October 2007, the County filed a petition of tax foreclosure pursuant to Real Property Tax Law § 1123 for the delinquent parcels and an ensuing in rem tax foreclosure action was commenced. The County gave notice of the foreclosure action by publishing the notice in five newspapers for three non-consecutive weeks over a two-month period; posting the notice in conspicuous locations at the Department of Finance office, the Orange County Clerk's office and the Orange County courthouse; and by mailing the notice by regular first-class mail and certified mail, return receipt requested, to the Amity Road residence. The certified mailing was returned to the County as "unclaimed."

The Helseths did not answer, exercise their right to redeem the property or otherwise appear in the foreclosure action and the County moved, on April 7, 2008, for a default judgment of foreclosure. Judgment was entered and a deed was recorded on August 7, 2008, conveying title to the County.

Following the judgment of foreclosure, a letter was sent by certified mail, return receipt requested, informing the Helseths that the County had acquired title to the property. The letter further advised them of the opportunity to repurchase the property "back from the County through the release of the County's interest." The certified mailing, which was again mailed to the Amity Road address, was returned as "not deliverable as addressed."

The Helseths first learned of the underlying foreclosure action and a scheduled auction sale of the property when they were informed by their real estate broker that potential buyers had inquired about the lot. As a result, they moved by order to show cause to stay the sale of the property, but Supreme Court declined to sign a temporary restraining order, adjourning the matter to a date after the auction. Consequently, the Helseths appeared at the auction and submitted a winning bid of $150,000, paying a $15,000 deposit. However, they failed to remit the remaining balance and the County auctioned the property to another party.

Supreme Court subsequently ruled on the order to show cause, concluding that the County's provision of notice for the foreclosure action satisfied constitutional due process. However, the court held that the County's additional notice was inadequate, remarking that:

"[C]onstitutional due process requirements attendant to one's right to redeem property from a municipality following a tax lien foreclosure have not been met where, as here, the municipality sends notification to the property owner of his or her constitutionally protected right to redemption by only one means, certified mail, return receipt requested, where said mailing is returned as not deliverable as addressed since such a notation, on its face carries the indicia that the address is invalid. This is especially so where, as here, the presumptive status of the address to which notifications have been forwarded changes from one at which a recipient is attempting to avoid notification to that of an invalid address.

Worth of note but not a necessary factor in the determination reached herein is the fact the notice of the right of redemption, even if received, failed to identify the very parcel to which it relates" (24 Misc3d 204, 210-211 [NY Sup Ct 2009] [internal citations and quotation marks omitted]).

The Appellate Division unanimously affirmed, similarly concluding that "the [County] failed to provide adequate notice of the [Helseths'] opportunity to obtain a release of the [County's] interest in their property after the expiration of the statutory redemption period pursuant to Local Law No. 7 (2001) of County of Orange" (73 AD3d 1053, 1053 [2d Dept 2010]). Because the certified mailing for the release and auction sale was returned as not deliverable, the court reasoned that the County "was obligated to take reasonable steps to ascertain a correct address for the [Helseths]" (id.). This Court granted leave to appeal (16 NY3d 704 [2011]), and we now reverse.

As an initial matter, both lower courts agreed -- as do the Helseths -- that the County provided adequate notice for the underlying foreclosure action. Thus, the sole issue before this Court is whether the County provided sufficient notice, in accord with constitutional due process, of the release option afforded pursuant to Local Law No. 7 (2001) of County of Orange, which provides in relevant part: "The Enforcing Officer may, prior to the public auction, permit the previous owner of record to purchase his or her parcel through a release of the County's interest . . . All releases of the County's interest must be approved by a majority vote of the County Legislature" (Orange County Local Law No. 7 [5][b][1]).

The County argues that constitutional due process only required notice of the pending foreclosure action and not for each successive stage of the proceedings. The Helseths contend that when a municipality provides for a release or repurchase right by law, the landowner has a continued property interest entitled to additional, adequate notice. With respect to the mailed notice itself, it is asserted that it was deficient because its generic, pro forma language could not reasonably apprise the recipient of the matter at issue. Moreover, the County failed to conduct a reasonable search or investigation to ascertain an accurate address when the mailing was returned as not deliverable (see Matter of Harner v County of Tioga, 5 NY3d 136 [2009]). We agree with the County and hold that it was only obligated to give singular notice of the foreclosure action as that was the underlying governmental action threatening the Helseths' property interests.

It has been well established that "[b]oth the Federal and State Constitutions provide that the State may not deprive a person of property without due process of law" (Kennedy v Mossafa, 100 NY2d 1, 8-9 [2003]; see also US Const 14th Amend; NY Const, art. I, ยง 6). Due process requires that notice be "reasonably calculated, under all the circumstances, to apprise" the parties whose rights are to be affected of the opportunity to appear and be heard (Mullane ...


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