On July 20, 2016, in a unanimous decision, the Pennsylvania Supreme Court affirmed the “title wash” tax sale principle in Herder Spring Hunting Club v. Keller, No. 5 MAP 2015 (Pa. July 19, 2016).  This principle was first applied by the Court in Powell v. Lantzy, 34 A. 450 (Pa. 1896) and Hutchinson v. Kline, 49 A. 312 (Pa. 1901).

Prior to 1961, tax sales of “unseated” (unimproved) lands passed title to severed oil and gas estates if the oil and gas estate owner had failed to give notice to the commissioners of the severance so that a separate oil and gas assessment could be created. Because unseated lands were assessed in the name of the property and not in the name of the property owner, notice of an impending tax sale of unseated lands was often not provided to the current owner of the unseated land.  Instead, notice requirements could be met by publishing notices in the name of the original warrant.

The Supreme Court focused on a 1935 tax sale, and concluded that the assessment and subject deed covered the entire fee estate, including oil and gas rights reserved in 1899, rather than just the surface of the property. The Court rejected defendants’ contentions that oil and gas could not be properly assessed and that insufficient notice of the sale violated their due process rights.

This decision highlights the importance of carefully reviewing tax sales of tracts after oil and gas rights have been severed. Click here to view the decision and the concurring opinion by Justice Todd.