Notice of Tax Lien Foreclosure to Mortgage Holders is Determined by the Address in the Mortgage

A Wisconsin appeals court recently ruled that a county foreclosing a tax lien need look no further than the recorded mortgage to find the address for notice of the foreclosure to a mortgage holder. If the mortgage contains no address, then notice of the tax lien foreclosure need not be sent to the mortgage holder.

Foreclosure by the government for failure to pay taxes is a drastic measure, and requires strict compliance by the government with statutory procedures. Wis. Stat. section 75.521(3) sets out the notice requirements that counties must follow to commence tax lien foreclosure proceedings, including notices that must be sent to property owners and those with mortgages or other liens on or interests in the property.

In Juneau County v. Associated Bank, N.A., 2012AP1304 (Jan. 31, 2013), the court concluded that under the statute, "the county was not required . . . to search beyond those records located in the office of the register of deeds and related to the affected parcels in order to ascertain the bank’s address." Because the mortgages recorded by the bank did not contain the bank’s address, the county strictly complied with the statute when it classified the bank as having an "unknown address" in the tax lien foreclosure proceeding.

The bank contended that the statute should not be read in such a limited fashion, and that the county had actual and constructive knowledge of the bank’s address. The bank had previously sent tax payments for the parcels to the county (containing the bank’s address on the envelope and on the check that paid the taxes), and had included the bank’s address on a foreclosure complaint relating to the affected parcels.

The court was unconvinced. Not only does the statute not require that the county look beyond the recorded mortgage, but the court concluded that requiring a further search "is also unreasonable because it provides no guidance on the parameters of the required search, and no apparent stopping point."

To assure receipt of notice of tax lien foreclosures, mortgages, assignments of leases and rents and other lien documents should contain the address of the secured party.