In an attempt to recoup delinquent taxes in Pennsylvania, properties are commonly sold under the Real Estate Tax Sale Law (“RETSL”). Pursuant to RETSL, there are three types of tax sales, with an Upset Sale being the first time a property can be sold. The Upset Sale process has its own set of rules and procedures, and these rules and procedures must be followed strictly to withstand constitutional scrutiny and due process challenges, including having the sale set aside by the courts. Whether you’re a taxpayer seeking to prevent the sale of property or perhaps an investor interested in purchasing real estate through a tax sale, here’s what you need to know about an Upset Sale in PA.
What is an Upset Sale in PA?
The Upset Sale is the first time a property can be offered for sale, and it only occurs after two years of delinquent taxes. Taking place annually in September, the Upset Sale is a public auction where the starting bid for the Property is the “Upset Price”, consisting of any unpaid real estate taxes, interest and fees, and certain other liens or judgments on the property. The Upset Sale only satisfies delinquent taxes, and existing mortgages and other encumbrances are the responsibility of the purchaser. Nevertheless, the Upset Price is usually far less than the market value of the property, and there can be considerable competition in bidding.
Each county in PA is responsible to schedule its own dates for Upset Sales. In the Greater Lehigh Valley, the 2024 dates are as follows:
- Berks County – September 12
- Carbon County – September 18
- Lehigh County – September 11
- Montgomery County – September 26
- Northampton County – September 19
In 2021, RETSL was amended to require Upset Sale bidders to register prior to the Upset Sale. Each county maintains its own website and process governing registration.
Notice Requirements for an Upset Sale in PA
If a property is sold at an Upset Sale, the Tax Claim Bureau must send notice to the owner indicating that the property was sold and that the sale will be confirmed by the Court of Common Pleas. The owner of the property has thirty (30) days from the court’s confirmation to challenge the sale by filing “exceptions” or “objections” and requesting that the Upset Sale be set aside.
An Upset Sale will only be set aside when the Tax Claim Bureau fails to prove that it strictly adhered to the detailed requirements of RETSL. Most of the time, if there is a bad sale, the Tax Claim Bureau will have failed to adhere to notice requirements, which include the following:
- Notice of the sale of the Property must be published in two (2) newspapers of general circulation in the county and the County Law Journal at least 30 days before the sale at least thirty (30) days before the sale. The notice must include:
- the purpose of the sale,
- the time of the sale,
- the place of the sale,
- the terms of the sale, including the Upset Price, and
- a sufficient description of the property to be sold, including the name of the owner.
- Notice including the same content must be given to the owner of the property at least thirty (30) days before the date of the sale by United States Certified Mail, restricted delivery, return receipt requested.
- Notice must be physically posted on the property ten (10) days prior to the sale.
If any one of these notice requirements is not strictly adhered to, then the Upset Sale must be set aside. Most notice issues involve a lack of proper mail notice or a problem with physically posting the property, with issues of notice in the newspaper and the law journal less common.
Preventing an Upset Sale in PA 
At risk of losing property to Upset Sale and wish to avoid a battle in court? If a taxpayer pays at least 25% of the taxes due, or if the Tax Claim Bureau otherwise receives funds equivalent to 25% of the taxes due, the Tax Claim Bureau is required to notify a taxpayer of their right under RETSL to enter into an installment plan to pay the remaining taxes.
As noted on most county websites, if your property is listed for the annual Upset Sale and you would like it removed, you are invited to contact your local Tax Claim Bureau to discuss your case.
Investor Caveats in an Upset Sale in PA
If you are looking to grow your real estate portfolio, an Upset Sale may seem to be a desirable way to acquire property. However, as previously stated, the Upset Sale price does not relinquish any mortgages or other encumbrances against the property, which may actually exceed its value. By winning a property at an Upset Sale, these become the responsibility of the purchaser.
Should a taxpayer challenge the Upset Sale, the successful bidder does not have an automatic right to participate in a taxpayer’s challenge, or even to receive notice. In a Lehigh County case, the Commonwealth Court held that, under RETSL, purchasers at an Upset Sale are not indispensable parties and their due process rights are not violated simply because they may have an interest in the sale.
Effectively, without some diligence, a purchaser at an Upset Sale can invest time and money into a property and have the matter settled without their input. If you are one such investor, it is crucial that you monitor court records and be prepared to argue your right to participate in a taxpayer’s challenge. An experienced real estate attorney can help you explore your options and potential arguments.
Legal support for an Upset Sale in PA
There are several legal requirements and due process rights that must be satisfied in order for an Upset Sale in PA to be successful or successfully stopped. Whether you are buying a property at a tax sale, or you have unfortunately lost a property at a tax sale, an attorney with experience in tax sales and all facets of residential and commercial real estate can help you navigate these challenges.
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