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Volume 8 - Opinions of Counsel SBEA No. 33

Opinions of Counsel index

Taxes (enforcement) (foreclosure in rem - cost of title search) - RPTL, §§ 1116, 1122:

The costs of title searches performed as part of an in rem tax enforcement proceeding may not be charged back to those parcels which are the subjects of that proceeding.

We have been asked whether a tax district which enforces (payment of taxes by foreclosure in rem may charge back to each parcel the cost of title searches for the purpose of notices to interested parties.

Title 3 of Article 11 of the RPTL does not make any provision for the cost of title searches to be charged back to affected parcels. This is in contrast to section 1116 of Title 2 of Article 11, which specifically authorizes such charges, although in limited amounts, in proceedings to foreclose tax liens as in actions to foreclose a mortgage.

We note that subdivision 6 of section 1122 provides that a parcel may be redeemed by paying all of the sums mentioned in the list of delinquent taxes, which is provided for in subdivisions (1), (2) and (3) of the same section, before the expiration of the redemption period. However, none of those subdivisions makes any reference to a charge for title searches. Final judgments rendered pursuant to Title 3 are the subject of section 1136, which does not contain any provision for awarding any costs, such as for a title search, to the tax district. Since specific provision is made in Title 2 for charging the costs of a title search to each parcel and no similar provision is made in Title 3, we must assume that the Legislature did not intend that such charges be allowed in enforcement proceedings conducted pursuant to Title 3.

We believe that the contrast between Titles 2 and 3 in this regard can be attributed to the fact that Title 2 requires notice to mortgagees of record (see, §1110(1)), which would presume a search of those records, while Title 3 merely requires notice by publication, unless the lienholder has filed a notice of claim as provided in section 1126. Thus, under Title 2 the onus is on the municipality to identify and notify the lienholder, while Title 3 merely requires notice to one who has previously made known (to the municipality) the lien interest in the real property.

However, the legitimacy of this distinction has been extinguished by the decision of the United States Supreme Court in Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). As that case would appear to mandate notice to all lienholders of record, whose names and whereabouts are reasonably ascertainable, tax districts will be obligated to search the public record for such persons. The cost incurred should be considered as a charge against each parcel. It seems likely that this will be one of the many subjects for reconsideration by the State Legislature in the near future.

March 30, 1984

Updated: