Service by Mail of Right of Redemption Notice for Tax Sale Property is Constitutional

The case is Kluender v. Plum Grove Investments, Inc., No. 21-1437 (Iowa Sup. Ct. Feb. 3, 2023).

In a recent case, the Iowa Supreme Court considered whether Iowa’s tax-sale redemption notice procedures violated a landowner’s due process rights. The landowner argued that the law was unconstitutional because it did not require personal service, only notice by mail. The Court ruled that due process does not guarantee a property owner actual notice before the government takes the property. Instead, the landowner is entitled to a method of service “reasonably calculated” to provide timely notice.

Background

To collect unpaid property tax, Iowa counties hold yearly auctions at which parcels with unpaid property taxes are sold to the highest bidder. These sales are controlled by Iowa Code chapters 446 – 448. County treasurers hold the auctions on the third Monday in June. As a result of a sale, the purchaser receives a “certificate of purchase,” and the landowner is notified by the treasurer that the parcel was sold at the tax sale. The certificate of purchase does not transfer ownership of the parcel to the purchaser at the tax sale. Instead, the original landowner retains a right of redemption for two years after the sale. Iowa Code § 447.9 states that the purchaser must send a redemption expiration notice to a landowner whose property has been sold in a tax sale 90 days before that right expires. The notice “shall be served by regular mail and certified mail.” The purchaser receives a tax deed and becomes the owner of the parcel only after the notice has been sent and the 90 days has expired without redemption.

Facts

In this case, a parcel of farmland was sold at the 2017 Floyd County tax sale. The owner did not reside on this parcel. On April 14, 2020, the purchaser sent redemption expiration notices to the parcel and the landowner’s last known residential address via regular mail and certified mail. The certified mail letters were returned as undeliverable, but the regular mail letters were not. The original landowner did not redeem the property, and the purchaser was issued a tax deed by the treasurer on August 11, 2020. The purchaser mailed the original owner a demand to vacate the property notice in August, and the original owner admitted he received it. This notice was mailed to the original owner’s residential address.

In November 2020, the original owner filed suit claiming he never received the redemption notice and that Iowa Code § 447.9 was unconstitutional under both the Iowa and U.S. Constitution’s due process clauses. He argued that due process required personal service of the redemption expiration notice.

Analysis

The Iowa and U.S. Constitutions prohibit the government from depriving any person of life, liberty, or property without “due process of law.” The Iowa Supreme Court explained that the “Mullane framework” is the appropriate legal test for deciding whether a notice method is adequate to satisfy due process. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). In Mullane, the U.S. Supreme Court required only that notice be “reasonably calculated” to give the interested party timely notice and allow them an opportunity to object.

Here, the Court found that the mailing requirements were reasonably calculated to give timely notice. The Court noted that the U.S. Supreme Court has repeatedly held that “mail service is an inexpensive and efficient mechanism that is reasonably calculated to provide actual notice.” Additionally, this statute requires both certified and regular mail service, increasing the likelihood that the landowner would be notified. The Court also reasoned that the timeframe of 90 days gave ample opportunity for the landowner to respond to the notice. Finally, the Court made clear that because notices sent through regular mail were not returned to the sender, the purchaser could assume that the original landowner received the notice through the regular mail.