Vacating a tax sale foreclosure in Maryland

by | Dec 20, 2016 | Firm News, General Info | 0 comments

In December 2016, Stewart A. Sutton successfully represented a client in vacating a tax sale foreclosure in Maryland.  The client, who resides in southern California, bought a home in Germantown, Maryland, for a relative in 2010.  The home was titled in the client’s name.  The client never resided at house in Germantown.  In 2011, the client had paid the balance of the mortgage on the Germantown house.

The client expected the relative to forward the property tax bills or that the relative would pay the property tax bills. However, the relative did neither.  Even worse, the relative failed to notify the client about notices of overdue property taxes from Montgomery County, the fact that the home was sold in a tax sale, that the tax sale purchaser filed a complaint to foreclose the right of redemption in 2014, that the tax sale purchaser posted the home with notices, that a Judgment foreclosing the right of redemption was entered in October 2015, and that the relative was evicted from the home in July 2016.

The client discovered the tax sale by happenstance in October 2016.  Stewart A. Sutton was retained to vacate the tax sale on the ground that the tax sale purchaser had never served the client in California with the Summons and Complaint.  The result was that the client had no notice of the tax sale purchaser’s Complaint and resulting Judgment.  In December 2016, the court granted the client’s motion to vacate the tax sale on the grounds that the tax sale purchaser had never served the Summons and Complaint on the client.

The Maryland Tax-Property Code provides the tax sale purchaser must serve the Summons and Complaint on the property owner.  See Tax-Property Code sections 14-839(a)(3) (“On the filing of the complaint, the court shall issue a summons to procure the answer and appearance of all the defendants as in other civil actions”) and 14-839(a)(5) (“Notice to a defendant may be made in any other manner that results in actual notice of the pendency of the action to the defendant”).

Maryland Rules of Court reiterate that the Summons and Complaint must be served on the property owner.  Maryland Rule 14-503(a) requires that the summons and complaint for a tax sale foreclosure “shall be served in accordance with Rule 2-121 on each defendant named in the complaint whose whereabouts are known”.   But if the property owner’s whereabouts are not known, Maryland Rule 14-503(b) requires that a party obtain substituted service via Maryland Rule 2-122.

Rule 2-122(a) provides that when a plaintiff in an in rem action “has shown by affidavit that the whereabouts of the defendants are unknown and that  reasonable efforts have been made in good faith to locate the defendant, the court may order service by the mailing of the notice to the defendant’s last address and” by either posting, publication, or “any other means of notice that it deems appropriate in the circumstances”

A tax sale purchaser may attempt to claim that it made a reasonable, good faith effort to locate the property owner by conducting a Lexis/Nexis’ “Comprehensive Person Reports” search and that it was not required to obtain an actual order for substituted service pursuant to Maryland Rule 2-122(a).  See Voltolina v. Property Homes, LLC, 198 Md.App. 590 (2011) (permitting a tax sale purchaser to forego obtaining an order for substituted services, because the tax sale purchaser had complied with all of the other requirements of Maryland Rule 2-122(a), including having conducted a reasonable, good faith search to locate the property owner).   However, a Lexis/Nexis search is neither reliable nor accurate.  The results of a Lexis/Nexis search may not show the property owner’s actual current address, especially if the property owner never resided in the foreclosed property.  Professional process servers and skip tracers use the TransUnion Risk and Alternative Data Search (“TLO”) to locate individuals.

Practice Pointer to clients: The court will NOT hear your motion to vacate a Judgment foreclosing the right of redemption, unless you first deposit into the Court’s Registry the amount owed in back taxes as well as the statutory attorney’s fees and expenses owed to the tax sale purchaser.  See Canaj, Inc. v. Baker & Division Phase III 391 Md. 374 (2006).  The rationale is that the Court will not exercise its equity powers, unless the property owner can first demonstrate that it has the financial means to redeem the property.


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