Supreme Court Addresses Notice of Foreclosure Sales

When a property owner fails to pay real estate taxes, due process requires that the state make reasonable efforts to notify the owner of the resulting foreclosure proceeding. State and local statutory schemes often require the state to notify the owner by regular or certified mail. But if the notification is returned unclaimed or undeliverable, must the state make additional efforts to notify the owner? In Jones v. Flowers, 2006 U.S. Lexis 3451, the Supreme Court recently addressed this question, and held that when notice of a tax sale, sent certified mail, is returned to the state unclaimed, the due process clause requires the State to take 'additional reasonable steps' to provide notice to the property owner prior to the sale. The language of the Jones opinion casts doubt on the validity of the leading New York case on this issue, Kennedy v. Mossafa. 100 N.Y.2d 1

The Case

In Jones, property owner Gary Jones and his wife occupied their home for 25 years. Jones paid the mortgage each month, and the mortgage company paid the real estate taxes. When Jones separated from his wife, he left the home, but failed to inform the State of his change of address. Jones continued to make the mortgage payments until the 30-year mortgage was paid in full in 1997, but neither Jones nor his wife paid real estate taxes after that date. The State commenced foreclosure proceedings, and attempted to notify Jones by mailing a certified letter to him at the address of record. The letter informed Jones of his right of redemption, and explained that the house would be sold if Jones failed to exercise that right within 2 years. The post office returned the unopened certified letter to the State marked 'unclaimed.' Two years later, shortly before selling the property to a private bidder, the state once again attempted to notify Jones of the foreclosure. In addition to posting a 'notice of public sale' in the newspaper, the State mailed a second certified letter to Jones at the property address. Again, the letter was returned marked 'unclaimed.' The state took no additional steps to notify Jones of the sale.

After the sale, Jones sued the State, claiming that its failure to provide him with notice of the sale and his right of redemption violated his due process rights. In an opinion written by Chief Justice Roberts, the Supreme Court agreed, holding that the State violated Jones' due process rights because it failed to take additional reasonable steps to notify him of the sale after the certified letters were returned unclaimed. Noting that due process requires that notice be 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections,' the Court reasoned that a state must do more than enact a statutory scheme that is reasonably calculated to provide notice to property owners generally. Instead, the State must consider the particular circumstances of each case in determining whether its attempt to notify the owner is reasonable. The State's attempts to notify must be those that would be made by a reasonable person who truly wished to inform a homeowner of a pending foreclosure.

The Court's Ruling

In the Court's view, one who truly desired to inform a homeowner of an impending tax sale would take further action when a certified letter is returned unclaimed. The property owner's failure to provide the state with a current address does not excuse the State from taking the required additional reasonable steps.

The Court stopped short of requiring the State to search official records and other external sources of information to locate the property owner's current address. Recognizing that this would place too great a burden on the state, the Court required only that the State make additional attempts to alert the current occupant of the home of the pending action, reasoning that the occupant would be likely to pass the information on to the owner. Although the question whether a state took sufficient reasonable steps will vary depending on the particular facts of each case, the Court suggested that a state could satisfy due process requirements by sending a second notice by first-class mail, addressing a letter to the property's 'occupant,' or posting a notice on the door of the home. Following up by publication was not constitutionally adequate here, where it was possible to more effectively notify Jones of the impending sale.

The New York Court of Appeals

The New York Court of Appeals has twice addressed the issue presented in Flowers, first in Kennedy v. Mossafa, supra, and then again in Harner v. Tioga. 5 N.Y.3d 136. Although the Harner case is consistent with the holding in Flowers, the latter calls into question the validity of Kennedy. In Harner, the Court of Appeals held that a city did not violate a property owner's due process rights, even though the owner failed to receive actual notice of a foreclosure sale, because the city sent a second mailing via first-class mail when the certified mailing was returned unclaimed. In Kennedy, however, the Court of Appeals held that a municipality had satisfied due process requirements even though it took very minimal additional steps when a notice of foreclosure was returned as undeliverable. Language in Flowers casts doubt on Kennedy's continued validity.

Kennedy v. Mossafa

In Kennedy, the homeowner promptly paid her real estate taxes each year between 1983 and 1998, but missed her 1996 payment. The homeowner claimed that in 1991 she notified the town of a change to her mailing address, but the town nonetheless continued its practice of sending the tax bills to the subject property. In 1997, the town filed a foreclosure petition for failure to pay the 1996 tax bill. It posted and published the notice of foreclosure. The county also mailed a notice of
foreclosure to the owner at the subject property, but the post office returned the letter with the notation 'not deliverable as addressed, unable to forward.' The town took no immediate additional steps to notify the owner of the pending sale. In 1998, the town sent the owner a bill for that year at the address listed in the tax role. The owner paid it with a check that stated her new address. Language printed on the back of that tax bill informed the owner that she was delinquent on one or more payments, and that failure to pay could result in a loss of her property. The owner paid that bill, but did not pay past-due amounts. After the expiration of the statutory redemption period, the county received a default judgment. The county never sent the owner notice of the expiration of the redemption period or of the date of the tax sale.

Noting that the property owner had an obligation to notify her town of her change of mailing address, the Court of Appeals held that the county took sufficient additional steps to notify the property owner when the foreclosure notice was returned undeliverable. The court stated that the property owner had the burden to establish that the county could have found her correct mailing address through a search of the public records, and found that the owner had not met that burden. The property owner had led the county to believe that the address was correct, because she paid other tax bills sent to that address and never followed up to determine why the town had failed to change her address. Thus, the attempt at personal notice, coupled with posting and publication, satisfied due process.

The court's reasoning is shaky in light of Flowers. The Court's statement that the homeowner has the burden to prove that her correct address was ascertainable from the public record is faulty, as is its suggestion that the homeowner must lose because she failed to ensure that the town received her correct mailing address. According to Flowers, due process required the county to behave as a reasonable person who truly wished to inform this homeowner of a foreclosure sale. It seems unlikely that the county satisfied this obligation by informing the owner, through boilerplate language on the back of a subsequent tax bill, that she was delinquent on one or more payments and that delinquency would result in foreclosure. The county knew that the owner never received notice of the expiration date of her redemption right, or of the date of the foreclosure sale. It would have been simple for the county to follow up by posting a notice of foreclosure on the front door of the home, or by sending a letter to the home's current occupant. It is likely, therefore, that Kennedy has been overruled by Flowers.

Melanie B. Leslie is a Professor of Law at the Benjamin N. Cardozo School of Law.

When a property owner fails to pay real estate taxes, due process requires that the state make reasonable efforts to notify the owner of the resulting foreclosure proceeding. State and local statutory schemes often require the state to notify the owner by regular or certified mail. But if the notification is returned unclaimed or undeliverable, must the state make additional efforts to notify the owner? In Jones v. Flowers, 2006 U.S. Lexis 3451, the Supreme Court recently addressed this question, and held that when notice of a tax sale, sent certified mail, is returned to the state unclaimed, the due process clause requires the State to take 'additional reasonable steps' to provide notice to the property owner prior to the sale. The language of the Jones opinion casts doubt on the validity of the leading New York case on this issue, Kennedy v. Mossafa . 100 N.Y.2d 1

The Case

In Jones, property owner Gary Jones and his wife occupied their home for 25 years. Jones paid the mortgage each month, and the mortgage company paid the real estate taxes. When Jones separated from his wife, he left the home, but failed to inform the State of his change of address. Jones continued to make the mortgage payments until the 30-year mortgage was paid in full in 1997, but neither Jones nor his wife paid real estate taxes after that date. The State commenced foreclosure proceedings, and attempted to notify Jones by mailing a certified letter to him at the address of record. The letter informed Jones of his right of redemption, and explained that the house would be sold if Jones failed to exercise that right within 2 years. The post office returned the unopened certified letter to the State marked 'unclaimed.' Two years later, shortly before selling the property to a private bidder, the state once again attempted to notify Jones of the foreclosure. In addition to posting a 'notice of public sale' in the newspaper, the State mailed a second certified letter to Jones at the property address. Again, the letter was returned marked 'unclaimed.' The state took no additional steps to notify Jones of the sale.

After the sale, Jones sued the State, claiming that its failure to provide him with notice of the sale and his right of redemption violated his due process rights. In an opinion written by Chief Justice Roberts, the Supreme Court agreed, holding that the State violated Jones' due process rights because it failed to take additional reasonable steps to notify him of the sale after the certified letters were returned unclaimed. Noting that due process requires that notice be 'reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections,' the Court reasoned that a state must do more than enact a statutory scheme that is reasonably calculated to provide notice to property owners generally. Instead, the State must consider the particular circumstances of each case in determining whether its attempt to notify the owner is reasonable. The State's attempts to notify must be those that would be made by a reasonable person who truly wished to inform a homeowner of a pending foreclosure.

The Court's Ruling

In the Court's view, one who truly desired to inform a homeowner of an impending tax sale would take further action when a certified letter is returned unclaimed. The property owner's failure to provide the state with a current address does not excuse the State from taking the required additional reasonable steps.

The Court stopped short of requiring the State to search official records and other external sources of information to locate the property owner's current address. Recognizing that this would place too great a burden on the state, the Court required only that the State make additional attempts to alert the current occupant of the home of the pending action, reasoning that the occupant would be likely to pass the information on to the owner. Although the question whether a state took sufficient reasonable steps will vary depending on the particular facts of each case, the Court suggested that a state could satisfy due process requirements by sending a second notice by first-class mail, addressing a letter to the property's 'occupant,' or posting a notice on the door of the home. Following up by publication was not constitutionally adequate here, where it was possible to more effectively notify Jones of the impending sale.

The New York Court of Appeals

The New York Court of Appeals has twice addressed the issue presented in Flowers, first in Kennedy v. Mossafa, supra , and then again in Harner v. Tioga . 5 N.Y.3d 136. Although the Harner case is consistent with the holding in Flowers, the latter calls into question the validity of Kennedy. In Harner, the Court of Appeals held that a city did not violate a property owner's due process rights, even though the owner failed to receive actual notice of a foreclosure sale, because the city sent a second mailing via first-class mail when the certified mailing was returned unclaimed. In Kennedy, however, the Court of Appeals held that a municipality had satisfied due process requirements even though it took very minimal additional steps when a notice of foreclosure was returned as undeliverable. Language in Flowers casts doubt on Kennedy's continued validity.

Kennedy v. Mossafa

In Kennedy, the homeowner promptly paid her real estate taxes each year between 1983 and 1998, but missed her 1996 payment. The homeowner claimed that in 1991 she notified the town of a change to her mailing address, but the town nonetheless continued its practice of sending the tax bills to the subject property. In 1997, the town filed a foreclosure petition for failure to pay the 1996 tax bill. It posted and published the notice of foreclosure. The county also mailed a notice of
foreclosure to the owner at the subject property, but the post office returned the letter with the notation 'not deliverable as addressed, unable to forward.' The town took no immediate additional steps to notify the owner of the pending sale. In 1998, the town sent the owner a bill for that year at the address listed in the tax role. The owner paid it with a check that stated her new address. Language printed on the back of that tax bill informed the owner that she was delinquent on one or more payments, and that failure to pay could result in a loss of her property. The owner paid that bill, but did not pay past-due amounts. After the expiration of the statutory redemption period, the county received a default judgment. The county never sent the owner notice of the expiration of the redemption period or of the date of the tax sale.

Noting that the property owner had an obligation to notify her town of her change of mailing address, the Court of Appeals held that the county took sufficient additional steps to notify the property owner when the foreclosure notice was returned undeliverable. The court stated that the property owner had the burden to establish that the county could have found her correct mailing address through a search of the public records, and found that the owner had not met that burden. The property owner had led the county to believe that the address was correct, because she paid other tax bills sent to that address and never followed up to determine why the town had failed to change her address. Thus, the attempt at personal notice, coupled with posting and publication, satisfied due process.

The court's reasoning is shaky in light of Flowers. The Court's statement that the homeowner has the burden to prove that her correct address was ascertainable from the public record is faulty, as is its suggestion that the homeowner must lose because she failed to ensure that the town received her correct mailing address. According to Flowers, due process required the county to behave as a reasonable person who truly wished to inform this homeowner of a foreclosure sale. It seems unlikely that the county satisfied this obligation by informing the owner, through boilerplate language on the back of a subsequent tax bill, that she was delinquent on one or more payments and that delinquency would result in foreclosure. The county knew that the owner never received notice of the expiration date of her redemption right, or of the date of the foreclosure sale. It would have been simple for the county to follow up by posting a notice of foreclosure on the front door of the home, or by sending a letter to the home's current occupant. It is likely, therefore, that Kennedy has been overruled by Flowers.

Melanie B. Leslie is a Professor of Law at the Benjamin N. Cardozo School of Law.