"[No State shall] deprive any person of life, liberty, or property without due process of law." (1) In Jones v. Flowers, the United States Supreme Court held that when a state sends notice of a tax sale (2) by certified mail, and it is returned unclaimed, a state must take additional steps to notify an affected individual before selling the individual's property for unpaid taxes. (3) In so holding, the Supreme Court extended a previous ruling that due process requires the government to provide "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." (4)
The holding in Jones raises several significant questions. First, the decision raises the question of whether and under what circumstances a property owner's failure to notify the tax commissioner of an address change shifts the burden from a state so that adequate notice is not required. (5) Second, the decision raises the question of whether the constitutional notice requirements under Jones will satisfy the Court's desire to achieve a balance of interests between the private property owner and the state. (6) Third, by deciding that under certain "circumstances and conditions" the state will be required to provide additional procedural steps for notice, (6) the decision raises the question of what burdens will be imposed on the government to safeguard the adequacy of notice. (7) Finally, the decision raises the question of whether the statutory scheme of notice for a tax sale in Alabama is constitutionally valid.
The result in Jones is correct; however, applying the decision is likely to lead to inconsistent results. A better result would have been for the Court to hold that when a state affects a taking that deprives a person of property because of nonpayment of taxes, the state must serve actual notice upon the affected property owner.
The first section of this Note discusses general information on property tax sales, including a specific discussion of Alabama property tax sales; information on the right of redemption, including a specific discussion of the right of redemption in Alabama; the constitutional requirement of notice; and the legal background of the case. The second section recites the facts, the procedural posture and the Court's holding and reasoning. The third section analyzes the case and includes: (1) a discussion of whether the failure of a property owner to provide notice of a change of address to a state discharges the requirement of adequate notice, (2) an analysis of the result of constitutional notice through the Jones approach, (3) an analysis of the burdens imposed on a state resulting from the addition of reasonable procedural steps to provide notice, and (4) an analysis of the constitutionality of the statutory scheme of notice in Alabama. The final section of this Note is a summary of the issues and the conclusion.
Property Tax Sale
"[T]he power to collect taxes is essential to a municipality's ability to raise revenue and carry on its public business...." (8) Normally, the power to collect taxes and sell private property by a tax sale is granted through a state statute. (9) Generally, a property owner is required to pay taxes on his property annually, and if the owner fails to pay those taxes, the state has the authority to sell the property for the amount of the unpaid taxes. (10)
The process that a municipality follows to effectuate a tax sale and the use of the proceeds of a tax sale is fairly uniform among municipalities. Ordinarily, a municipality will announce the sale of the proposed property and then effectuate the sale through an open auction or a negotiated sale. (11) The municipality may apply the proceeds of the sale only to the amount owed in delinquent taxes plus applicable costs, fees, and penalties; any surplus is paid to the landowner. (12)
Even after the property is sold, the original owner may still have a right to the property. (13) Most state statutes give a property owner time following a tax sale where the owner may redeem their property by paying the amount that the purchaser paid plus any costs, fees, or penalties involved in the transaction. (14) Each state has varying requirements, but generally, tax sale and redemption statutes are construed liberally in favor of the original property owner attempting to redeem their vested right to the property. (15)
Alabama Code section 40-10-1 authorizes the probate court of each county to order the sale of land for the payment of taxes assessed on the lands when the tax collector reports that they were unable to collect the requisite taxes and that a statutorily authorized lien exists. (16) The tax collector or the deputy must serve notice of the impending tax sale decree by either personal service, service onto the property owner's agent, certified mail, or by leaving a copy at the residence or place of business of the property owner or his agent. (17) If the owner of the property is unknown, notice by publication is required. (18) Also, notice by publication is required if the notice remains unserved after two failed attempts on the same person. (19)
Notice by publication in Alabama can be perfected in two ways. The notice may be printed in a newspaper published in the county where the property is located once a week for three consecutive weeks. (20) If no newspaper in the same county exists, notice requirements may be met by publishing at the county courthouse for three consecutive weeks (20) and at a public place in the same precinct in which the property is located at least three weeks and at least thirty days before the day of the sale. (21) The information in the notice should include the parcels to be sold, the amount for which the parcels will be sold, and the property owner against whom the lien and sale is levied. (22) The notice must also mention if the property owner is unknown. (23)
Property Tax Sale Redemption
Redemption is "the act or an instance of reclaiming or regaining possession by paying a specific price." (24) Statutes are the only sources of authority that give a property owner the right to redeem; therefore, if a state does not grant the right to redeem through statutory language, no general right of redemption exists. (25) Even when a statute grants the right of redemption, the redemption can only be exercised in the manner and during the period of time prescribed by the statute. (26)
A valid redemption divests the tax sale purchaser's right to possession of the deed, voids the sale, and leaves the title in the same condition as it was before the tax sale. (27) Redemption neither creates a new title nor augments ownership; it simply restores the owner to the title as it stood before the tax sale. (28) Additionally, if a person purchases property at a tax sale with actual knowledge of another's right to redeem, the purchaser is not entitled to compensation for improvements or fixtures added to the property prior to the owner's redemption. (29)
In Alabama, the statute of limitations for a property owner's right of redemption relating to a tax sale is codified in Alabama Code section 40-10-120. (30) The owner of real property sold through a tax sale may redeem their property "within three years from the date of the sale." (31) The Alabama Supreme Court interpreted the "date of the sale" to refer only to "the initial sale at the courthouse" and has interpreted the three years to mean the time between "the sale at the courthouse and the issuance of the tax deed." (32) If the property is owned by the state, the property may be redeemed at any time before the title passes from the state. (33) The term "owner" refers to the owner of the property, mortgagee, purchaser of the lands, or any other person having an interest in the land. (34) If written notice is not given, adverse possession is the only method that will terminate the right of redemption. (35)
Constitutional Requirement of Notice
The Due Process Clause of the Fourteenth Amendment provides that no "State [shall] deprive any person of life, liberty, or property, without due process of law." (36) Defining due process is difficult; (37) however, the Court has held that two essential elements of procedural due process are notice to the defendant and the opportunity to be heard. (38) Key to the intent of the Due Process Clause is the right for every person to have an opportunity to be heard in a secure forum; (39) however, that right is of little value unless a person is informed of pending matters. (40)
Generally, there are three types of notice: actual notice, inquiry notice, and constructive notice. (41) Actual notice occurs when the party to be charged is actually made aware of any pending matters. (42) Inquiry notice is "[w]hatever is notice enough to excite attention and put the party on his guard and call for inquiry is notice of everything to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he shall be deemed conversant of it." (43) Constructive notice is notice not actually received by a party to be charged, but is satisfied, as to all future claimants, by being properly recorded. (44)
The Due Process Clause does not afford a citizen of a state the right to a jury trial or the right to an appeal nor does it proscribe any particular method of state procedure. (45) Due process is satisfied if a party has "reasonable notice and reasonable opportunity to be heard and to present his claim or defense; due regard being had to the nature of the proceeding and the character of the rights which may be affected by it." (46) There is no rigid standard for procedural due process; therefore, each circumstance will be evaluated to determine whether the notice provided was reasonable. (47) However, the Court has said that in analyzing each circumstance it must apply a balancing...