Opinion ID: 1965477
Heading Depth: 1
Heading Rank: 1

Heading: issues

Text: On appeal, the city contends that the hearing justice erred (1) by allowing Sepe and Slade's Ferry to raise a defense that, by statute, was personal to Joan Kilberg and (2) by applying the incorrect statute in determining the notice to which Mrs. Kilberg was entitled to receive. Specifically, the city argues that under § 44-9-11(b), as effective at the time of the tax sale, the right to notice was personal to each party entitled to it, and the lack of notice could not be asserted by any other party of interest. Consequently, the city asserts, Sepe and Slade's Ferry lacked standing to raise the defense of lack of notice to Mrs. Kilberg. Additionally, the city argues that any interest Mrs. Kilberg may have had in the property was extinguished by the mortgage foreclosure and that therefore Sepe and Slade's Ferry did not acquire any interest from her. The city's second argument implicates the language of the statutory notification requirements in effect at the time of the tax sale. The city ascribes error to the hearing justice's finding that Joan Kilberg was entitled to notice under § 44-9-10, which provided in pertinent part: (a) Whether or not the person or general partnership to whom the estate is taxed as of December 31st prior to the tax sale is a resident of this state, the collector shall, in addition to the foregoing, notify the taxpayer of the time and place of sale either by registered or certified mail    not less than twenty (20) days before the date of sale   . [6] According to the city, it was required to send certified notice under § 44-9-10 only to Arnold Kilberg, the record owner as of December 31, 2002; the city further contends that, because Joan Kilberg acquired her interest after December 31, 2002, the notice to which she was entitled was governed by either § 44-9-9 (requiring notice in public places and a newspaper) or § 44-9-11. [7] Because at the time § 44-9-11 required certified notice only to certain enumerated parties whose interests were recorded at least ninety days before the tax sale, and Joan Kilberg's interest was recorded eighty-two days before the tax sale, the city argues she was entitled only to the advertising and posting requirements of § 44-9-9. In response, Sepe and Slade's Ferry argue that they have standing to challenge the tax sale. Sepe and Slade's Ferry contend that they can raise Joan Kilberg's notice rights because they succeeded to her interest in the property and are in direct privity with her. They contend that a conveyance through a mortgage foreclosure passes all of the rights of the record owner in the form of a fee simple interest. Because title to the property, with all of its rights and privilegesincluding the owner's right to defend against a tax sale invalid as to his or her predecessor in titlepassed to Mr. Campellone as the successful bidder at the foreclosure sale, these rights were, in turn, conveyed to Sepe when it purchased the property from Mr. Campellone. Turning to the merits, Sepe and Slade's Ferry assert that the term taxpayer in § 44-9-10 necessarily included the record owner at the time of the tax sale. In their view, to find otherwise would run afoul of state and federal due-process protections that require adequate notice of tax sales to parties of interest. They argue that the city's reading of § 44-9-10 would mean that the taxpayer as of the previous December 31, who no longer may have any interest in the property, would receive greater notice protection than the current owner, who has everything to lose. Because Joan Kilberg was not merely an interested party, but the record owner eighty-two days before the tax sale, Sepe and Slade's Ferry assert she was entitled to certified notice at least twenty days before the tax sale, under § 44-9-10. They further contend that because failure to comply with statutory notice provisions invalidates a tax sale the city's failure to notify Joan Kilberg necessarily nullifies the tax sale. Sepe and Slade's Ferry also argue that the city's interpretation of § 44-9-11 would violate due process and thus render the statute unconstitutional. Sepe and Slade's Ferry point out that the language in § 44-9-11 in effect at the time of the tax sale did not provide for any notice to the owner of record. At the time of the June 25, 2003 tax sale, § 44-9-11 required certified notice to various interested parties, subject to the condition that their interests were recorded ninety days before the tax sale, but the section did not specifically mention owners of record. The Rhode Island General Assembly later amended § 44-9-11 to require notice to the present owner of record. P.L.2003, ch. 262, § 1 (effective on January 6, 2004). Thus, under current law, owners of record must receive notice only if their interest was recorded ninety days before the tax sale, [8] but at the time of the tax sale in this case, § 44-9-11 did not specifically enumerate owners of record. Sepe and Slade's Ferry assert, therefore, that in June 2003, § 44-9-10, and not § 44-9-11, governed the appropriate notice to property owners. In the alternative, Sepe and Slade's Ferry argue that they purchased the property free and clear of the tax sale. Before closing on the property, Sepe and Slade's Ferry ordered a municipal lien certificate from the city in accordance with § 44-7-11. They argue that because the certificate did not mention 140 Reservoir Avenue's tax payment, they took title to the property free and clear of the tax sale by operation of law. Finally, it is worth noting that 140 Reservoir Avenue has declined to take an active role in presenting additional arguments before this Court. [9] 140 Reservoir Avenue asserts that if this Court finds the tax sale void, then it must be reimbursed as an innocent purchaser. See § 44-9-43 (allowing refunds to innocent purchasers after invalid tax sales). However, 140 Reservoir Avenue also asserts that if this Court determines that the city held a valid tax sale, then the case should be remanded to the Superior Court to set the terms of redemption. See § 44-9-29 (setting forth rights of redemption for parties of interest).