A buyer of real estate at a tax sale should beware that the previous owner may have an unlimited period to “redeem” the property if that owner was a member of the military, under a new ruling by the U.S. Supreme Court interpreting the Soldiers’ and Sailors’ Relief Act.
The case is Conroy v. Anis-koff, et al., MLW No. US-5826, decided by the nation’s high court on March 31.
Normally, an owner of property sold for delinquent taxes has a limited period to “redeem” it, or buy it back, by paying the tax, interest and resulting sale costs, explained one real estate expert.
In Missouri that redemption period is two years, except in Jackson County, where it is only six months, according to the expert, Kansas City attorney Stephen Todd.
Soldiers’ And Sailors’ Act
The Soldiers’ and Sailors’ Relief Act, however, at 50 U.S.C. § 525, says, “The period of military service shall not be included in computing any period now or hereafter to be limited by any law…for the bringing of any action or proceeding in any court…by or against any person in military service…[or] any period now or hereafter provided by any law for the redemption of real property sold or forfeited to enforce any obligation, tax, or assessment.”
Some state and lower federal courts had ruled that literal application of the Act would be “absurd and illogical.”
“Literal application of the Act to toll the limitation is particularly harsh on the buyer if the delinquent taxpayer is a career soldier,” said Todd.
Consequently, those courts held that a redemption period would be tolled under the Act only if the taxpayer could show “prejudice,” or that his “military service resulted in hardship excusing timely legal action.”
A trial court and the Supreme Court of Maine had followed those decisions and imposed a “prejudice” requirement in the March 31 case on a soldier seeking to redeem property beyond Maine’s usual limit.
But the U.S. Supreme Court reversed on the grounds the Act afforded the soldier “absolute protection” from the state’s limited redemption period for so long as he was in the military.
“The statutory command in § 525 [of the Act] is unambiguous, unequivocal, and unlimited,” wrote Justice John Paul Stevens for the Supreme Court.
Stevens noted that other sections of the Act dealing with protection of soldiers from other kinds of limitations do impose a “prejudice” requirement or qualification on members of the military seeking to toll the limit.
Examples are limits on (1) enforcement of secured obligations, (2) enforcement of storage liens for personal property, (3) reopening judgments, (4) pursuing legal proceedings, attachments and garnishments, (5) recovering interest on pre-military obligations, and (6) pursuing eviction actions.
“By distinguishing sharply between the two types of protections, Congress unquestionably contemplated the ways that either type of protection would affect both military debtors and their civilian creditors,” wrote Stevens.
Thus, “we cannot say that Congress would have found our straightforward interpretation and application of [the Act] either absurd or illogical,” Stevens concluded.
Experts differed as to the scope of the court’s decision.
Lawyers Weekly USA quoted the attorney for the soldier in the case to the effect that the decision will have implications beyond the real estate area.
Although this case involved real estate, “the courts will construe it to suspend statutes of limitations for all cases, including tort actions,” said the soldier’s attorney, Robert Klonoff of Washington, D.C., in an interview with Lawyers Weekly USA.
Every time a soldier gets into a car wreck, this statute may come into play, Klonoff said.
According to Todd, who reads the Supreme Court’s decision as being limited to cases involving the redemption of real property, the decision will have the greatest impact in Missouri in Jackson County and St. Louis City, since those are the only two counties in which a tax sale of real property routinely results in the buyer getting anything close to “marketable” title.
“In those two counties, tax sales are conducted under court supervision, with provisions for notice and a sheriff’s sale, which has to be reported to and approved by the court,” Todd explained. “Allowing unlimited redemption will be a significant change.”
“In all other counties, including St. Louis County, tax sales of real estate are conducted administratively by the Director of Revenue,” he continued.
“The buyer then has to bring a quiet title action to fully clear the title, and that would be covered under a different section of the Soldiers’ and Sailors’ Relief Act which requires a showing of some ‘prejudice’ to stay the action,” said Todd.
“Nationwide,” he said, “the biggest ripple will be in states that do some form of court-supervised tax sales and also have big military bases.
The Soldiers’ and Sailors’ Relief Act was enacted to ease the special hardships that military duty would impose on those drafted into military service.
There is a possibility that the provisions of the Act affording protection from the limits of state redemption statutes may be changed.
Last year the House Veterans’ Affairs Committee held hearings on inserting a “prejudice” requirement in the statute interpreted in the new Supreme Court case.
Those legislative changes are still being considered, according to Pentagon sources.
(The full text of the U.S. Supreme Court’s opinion in Conroy v. Aniskoff, et al., is available from Missouri Lawyers Weekly, MLW No. US-5826 – 18 pages.)