Sunday, February 16, 2014

PAR article on Act 93

Confusion regarding a recently signed bill has created some misunderstandings about how it will affect real estate and transactions.
“Act 93, originally House Bill 388 (Parker, D-Philadelphia), only changed how municipalities reduce property tax claims and tax liens to a final judgment in that county,” said PAR legal counsel Brett Woodburn. “As a result, municipalities no longer have to incur the expense of suing delinquent property owners to get a final judgment. This really expands the arsenal of weapons that municipalities have at their disposal to collect delinquent taxes and fees.

Be sure to read the comments.  Here is my response to Brett Woodburn's comment:

I agree that the laws enforcing money judgments have not changed. Presuming - as I have been told - that municipalities are on board and filing money judgments against delinquent property owners, what we have is a massive new overlay of money judgments attaching to real property.  It does not take an execution of a money judgment to make the judgment attach to real property.  It automatically attaches.  While these liens are attached to parcels, they cannot be refinanced or conveyed with good title until the liens are satisfied.  The unintended impact of Act 93 is to make distressed properties harder to sell, and in some cases impossible to sell.

The unintended consequence of allowing municipalities to forego the thought process involved in suing for final judgment is to take out of the mix review by the court and an opportunity for defense by the property owner.  The old system might have been costly and time consuming for municipalities, however, review by a competent attorney prior to filing suit would help municipalities consider which individual collection circumstances would be helped by the filing of such money judgments and which would be impeded.

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