Law On Indiana Tax Deeds Which Does Not Require The County Auditor To Send Notice Of Tax Sale Unless Mortgagee First Requests Notification Held Constitutional

In M & M Inv. Group, LLC v Ahlemeyer Farms, Inc., No. 03S04-1211-CC-645 (Ind. September 26, 2013), a tax-sale purchaser of mortgaged property filed a petition for issuance of a tax deed. Current Indiana law does not require the county auditor to mail notice of the pending sale to the mortgagee if the mortgagee has not first affirmatively requested such notice by submitting a form to the auditor. Ind.Code § 34-33.1-1-1(a) (Supp.2012). The mortgagee did not file such a form, and had no notice of the tax deed. So when the property was lost it sued claiming the statutory scheme violated the Due Process Clause of the Fourteenth Amendment. The trial court agreed and its ruling was upheld by the appellate court. The Supreme Court of Indiana, however, reversed. Looking at the history of the statutes, it noted that in response to several legal challenges the Indiana legislature amended the statutory scheme several times. In its current form it requires the county auditor to send notice to the mortgagee but only if the mortgagee first requests that it be provided notice. This scheme was upheld in a trio of Indiana cases in the 1990’s. The mortgagee argued that in a 2006 decision by the U.S. Supreme Court , Jones v. Flowers, 547 U.S. 220 (2006), where the Court said a state cannot simply do nothing if it knows an owner did not receive notice of a tax deed proceeding, abrogated the Indiana decisions upholding the statute’s constitutionality. The mortgagee contended that Jones implicitly rejected the requirement that a mortgagee with a recorded mortgage must request notice in order to receive notice. The Indiana Supreme Court held that Jones did not overrule Indiana law because Indiana’s scheme was reasonable. Requiring the county auditor to comb the files of the recorder’s office to see if a mortgage is recorded for a tax-delinquent property, assess whether the mortgage is still valid, and then determine whether the mortgage accurately reflects the mortgagee’s identity and address would impose too great a burden on the State. It also found that the burdens this approach would impose would not result in a greater likelihood of successful notification. In today’s era of mortgage-backed securities, to require a county auditor to perform a burdensome search where the owners of the mortgages are not reasonably identifiable, such as through the MERS system, is too great a burden on the State. This is underscored by the fact that the only reasonably certain way for an auditor to know who has a viable mortgage on a property is for the mortgagee to complete a simple form and submit it to the auditor.

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