In the case of Polonsky v. Town of Bedford, decided on June 28, 2018, the N.H. Supreme Court considered the interpretation of amendments to the alternative lien procedures statutes found in RSA 80:88-91. These statutes were enacted in response to Thomas Tool v. Croydon, 145 N.H. 218 (2000), in which the Court held that it was unconstitutional for municipalities to retain the entire proceeds of a tax sale even though the amount realized from the sale far exceeded the amount of tax owed to the municipality. RSA 80:88-91 provide procedures for the proceeds of a tax sale in excess of amounts owed, including a substantial penalty and attorneys fees, to be either paid to the property owner or paid to a court for the court to determine who should receive the proceeds where there are multiple parties with an interest in the property. If a municipality sells a property taken by tax deed within three years of the tax deed, then the municipality could not retain any excess proceeds from the sale. However, in the case of Polonsky v. Bedford, the Town of Bedford did not sell the property within three years, so the issue decided by the Court was whether the statutory scheme prevented a former property owner from recovering any excess if the sale takes place beyond three years from the date of the tax deed. The trial court had ruled that the RSA 80:89,VII limited the duration of the duty of the municipality to pay the proceeds into court and the property owner’s right to repurchase the property to three years from the date of the tax deed but it did not prevent a former owner from recovering the proceeds should the sale occur after the three years. The trial court based its decision in part on its finding that the Town’s interpretation “would result in significant windfalls to the municipality without recourse for the former owner.” The Supreme Court reversed the trial court’s ruling finding that the plain language of the statute provided after the three years had expired the municipality had no duty to the former owner with respect to the excess proceeds. The Supreme Court left open the question of whether the retention of the proceeds beyond the three years constituted a taking without just compensation under the N.H. Constitution. The case was remanded for determinations of fact and consideration of the issues and defenses related to this claim. (The author represents a party to this action so his views may be colored.)
By: John F. Hayes, Esq., former general counsel to the New Hampshire Department of Revenue Administration.