Bulletin: NH000005

Dear Associates:

The following is an update of legislative changes in the wake of White V. Wolfeboro.

In the White case, the court overturned a tax sale of a whole parcel of property ruling that the sale should have been only that fractional share of an undivided interest as the amount of the tax, interest and charges bore in relation to the full value of the property for the tax year in question. The ruling was directly in opposition to what has been customary tax sale practice through out the State. The impact of the decision was felt throughout the real estate, legal and lending communities as many titles containing tax deeds were considered unmarketable due to the White decision.

The Legislature responded with House bill 637 which contains, in part, a rectification of RSA 80:24 and 80:24a which would permit tax collectors to sell at auction so much of the whole property as a bidder is willing to buy for the unpaid taxes, interest and cost due. The Bill was sent to the Supreme Court for an opinion on the Constitutional permissibility of the Bill and a review of the reaffirmation of RSA 80:39, the ten year limitation on contesting tax sales.

The Justices took the opportunity in reviewing House Bill 637 to find that justice required the application of White V. Wolfeboro to be prospective only. Thus, tax sales conducted prior to September 23, 1988 would not be subject to the decision in White V. Wolfeboro.

Generally the Justices did not have difficulty with the new tax sale procedure since the Bill provided it would take effect upon passage and did not attempt to make it retroactive. The Court noted that under the new statutory language a bidder could acquire the whole parcel for the Moines owed.

The opinion also reviewed the section dealing with the ten year incontestability statute finding that the reemphasize on RSA 80:39 is not a retrospective law in violation of the State Constitution since it does not change the existing law.

The Justices did comment, however, that the language of the Bill which generally affirms the validity of tax sales would not apply to post White V. Wolfeboro tax sales since it would prematurely cut off the contestability of rights under RSA 80:39. In addition, the Legislature cannot enact laws affecting existing causes of action or magically cure defects giving rise to those causes of action.

House Bill 637 was signed by the Governor and its effective date was June 5, 1989. The new Bill, coupled with the advisory opinion, have resolved in good part the tax sale dilemma. Sales conducted between the White V. Wolfeboro decision, and June 5, 1989, the new Bill's effective date, will provide a window of opportunity for litigation and there is no assuring what future Constitutional challenges the new Bill might face, but clearly the retrospective application of White V. Wolfeboro is behind us.

The Rockingham Superior Court ruled on the reaffirmation of the ten year incontestability statute and the standards of White V. Wolfeboro in Lewis Builders of New Hampshire Inc., vs. Unknown Heirs of Thomas Hoit, Jr. and Merrimac Public Library et al, Rockingham Superior Court Case #87-E-490, dated July 11, 1989.

In Lewis, the Town of Hampstead conducted a tax sale in 1928, and deeded to the Town in 1932. The plaintiff, Lewis Builders, successor in interest to the Town, sought to quiet the title pursuant to RSA 498-5:a.

The only defendant to respond, was the Merrimac Public Library. Merrimac challenged the validity of the sale on two grounds: 1) Failure to comply with the standards set forth in White V. Wolfeboro and the applicable provisions of RSA 80 and 2) A constitutional challenge which asserted the amendment to RSA 80:39 applying the statute to all collectors deeds was an unconstitutional retrospective law.

The Court ruled that the defendant could not contest the validity of the tax sale on either ground. Justice Dunn ruled the amendment imposes reasonable conditions to the bringing or defending of a lawsuit involving tax sales, and deals with the time for contesting a tax sale and not with limitations on substantive rights.

While not specifically analyzing the White V. Wolfeboro standards, the court ruled that the tax sale was conducted in accordance with RSA 80:21 notice of sale provisions and other provisions of RSA 80. The Court also focused on the inequity of allowing the defendant to contest the validity of tax sale which occurred over fifty (50) years ago.

The position of Stewart Title Guaranty Company, has reverted to the pre- White V. Wolfeboro position. Tax titles will be insured so long as the Tax Collectors Deed has been on record for ten years provided the notices are accurate and in compliance with statutory requirements. Tax sales within the last ten years will be insured only if there is a confirmatory deed from the property owner who lost a tax sale or a decree quieting title.

The tax sale controversy may become of less importance going forward as many municipalities in the State have adopted the tax lien provisions in which a tax lien is placed against the property by the Town.