Monday, August 01, 2011

AZ Appeals Court Sets Aside Judgment Based On Crappy Service Of Tax F'closure Notice; Says Mailing To Address Based On 8-Year Old Info Not Sufficient

A half-hearted attempt at serving a notification of a tax lien foreclosure action was at the heart of a recent ruling by a 3-judge panel of the Arizona Court of Appeals.

In another reversal of a trial court ruling in a foreclosure matter, the appeals court determined that the lien holder's failure to comply with the state statute in attempting proper notification, sending correspondence (to an address taken from an earlier-recorded document that was eight years old) that was returned unopened, after learning from a process server that the property owner was no longer at the address listed at that address, was enough to void a default foreclosure judgment against the property owner.(1)

For the ruling, see Advanced Property Tax Liens Inc. v. Sherman, 1 CA-CV 10-0371 (Ariz. App. Div. 1, Dept. D July 26, 2011).

(1) The court elaborated (bold text is my emphasis):
  • ¶18 On this record, we conclude that APT did not send the notice of intent to foreclose to the Shermans and therefore did not comply with A.R.S. § 42-18202(A). APT sent the notice to an eight-year-old address without, apparently, determining whether by doing so it was sending the notice to the "property owner of record," that is, to the Shermans.

    Having learned that the Pioneer address was no longer current for the Shermans and that the envelope containing the notice of intent to foreclose had been returned "unclaimed" and unopened, APT could no longer conclude that it had complied with the statutory requirement under A.R.S. § 42-18202(A) of mailing the notice to the Shermans. Section 42-18202(A) requires more than mailing the notice of intent to foreclose to an eight-year-old address that is no longer current, especially after learning the address was no longer current.

    ¶19 Our conclusion is further supported by the statutory provisions setting forth the alternative method of notification that requires the lien holder to send notification to one, two, or three specified addresses ascertainable from the records of the county assessor and county treasurer. A.R.S. § 42-18202(A)(1)(a)-(c).

    The legislature, by providing this alternative notice procedure, intended to provide lien holders with a notice procedure that could be reasonably satisfied and objectively proven, while at the same time achieving a high probability that the notice of the lien holder's intent to foreclose will reach the property owner.

    ¶20 If a lien holder tasked with sending notice of intent to foreclose under A.R.S. § 42-18202(A) has identified the "property owner of record" according to the county recorder's records and has a current address for that owner, the first alternative notice procedure in §42-18202(A) may be preferable. But if the lien holder is not confident that the available address for the owner of record is current, the lien holder may prefer to follow the more extensive notice procedure set forth in subparagraphs 42-18202(A)(1)(a)-(c).

    ¶21 Because APT failed to mail its notice of intent to foreclose to the Shermans, as required by A.R.S. § 42-18202(A), the trial court was not authorized to proceed with APT's action to foreclose. A.R.S. § 42-18202(C).

    As a result, the judgment is void and the court erred in denying the Shermans' Rule 60(c) motion.