Daily Development for Monday, February 7, 2000

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

FORECLOSURE; NOTICE; ASSOCIATIONS: Where subdivision parcel is marked on plat as a "park . . . for the benefit of the homeowners in the subdivision," then such homeowners are entitled to notice of a subsequent tax foreclosure of the property, even if they never formally accepted a conveyance or dedication of the property.

In re Ward, No. 2981656, http://www.state.il.us/court/2000/2981656.htm (Wisc. App. 2nd Dist. 1/26/00)

The evidence showed that, pursuant to a recorded Declaration, it was the intent of the developer that the homeowners form into an association and that the property in question then be deeded to the association. The association, however, never was formed. It is unlikely that anyone ever paid the taxes on the property (the case isn't clear), but nothing was ever made of it because the property had been taxed at $1 per year pursuant to the policy of the local taxing authorities with respect to dedicated park property of this type.

Some years later, there was an error on the part of the assessor's office, apparently, and the property, which had been assessed for taxes at only $1 per year, was assessed at a higher amount, raising it above the line for tax foreclosure proceedings when the taxes were not paid. Someone acquired the right to obtain a tax deed through these proceedings. Prior to the deed become finalized, however, it was necessary for the claimant to demonstrate that all parties with an interest had received notice of the proceedings.

The homeowners first argued that the property was not subject to foreclosure at all, because it fell within the public property exemption. The court rejected this contention.

The homeowners then argued that they had an interest in the property warranting notice. The tax deed claimant pointed out that the statute did not identify the homeowners within that group of people entitled to statutory notice, but the court concluded that, even though the statute did not name them, the homeowners were entitled to notice because they had "an undefined interest in the property by virtue of the clear donative intent of the recorded plat and declaration of covenants."

Comment 1: Although it may seem improper to "make up" a right to notice not conferred by statute, we're talking Constitutional Due Process here. The homeowners were clearly intended to have an interest, and the record demonstrated this, so the court was correct in insuring that their property was not taken without due process of law.

Comment 2: Note that the homeowners were able to skate away from the problem that the real intent of the documents was to form a homeowners association. Arguably, the association should have received the notice, and if there was no association, there need be no notice. Compare Stuart v. Flemming, 560 N.W.2d 336 (Mich. 1997) (the DIRT DD for 4/15/97 ), where a court held that where an association failed to form an architectural review committee as provided in the Declaration, individual homeowners had no right to notice of a proposed building or to raise a whether the proposed structure to met the explicitly "compatibility" standards of the Declaration. The difference between this case and Stuart, of course is that in the instant case we're talking true forfeiture of the property and the rights with it. But is the construction of a really ugly house right next to your dream home, in violation of "compatibility standards," a forfeiture of protection of real property interests at least as significant as loss of use rights in a private park?

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