Bedford Tax Deed Case Brings State Law Into Question

BEDFORD, NH — The Hillsborough County Superior Court has recently ruled in favor of a Bedford resident whose house had been taken by the town after non-payment of property taxes. At question is whether the town is required to pay back excess revenues from a future sale of the property to the prior owner, Richard Polonsky, if the property is not resold or repurchased within three years of the tax deed. The court ruled last month that the state law alleviating the town from that requirement is unconstitutional. The New Hampshire Supreme Court will have the final decision.

According to the Superior Court's decision in the case of Richard Polonsky v. Town of Bedford, Polonsky inherited the property at 21 Wentworth Dr. in 2008. At the time, it was valued around $300,000. The court's ruling states that he failed to pay his property taxes between 2008 and 2010, causing the town to tax-deed the property, gaining ownership of it in May 2011.

For the next three years, Polonsky made attempts to negotiate regaining ownership of the three-bedroom home through the payment of back taxes only — not including the extra costs and penalties — but the town refused his offers, the ruling states. After three years of the property remaining tax-deeded, and no new buyer, the town made efforts to sell Polonsky's former home, and Polonsky filed suit.

In its ruling May 14, the Hillsborough County Superior Court addressed the state law that relieves a municipality of the responsibility to pay back any extra proceeds from such a sale to the original owner. Extra proceeds would include money the town would make from the sale other than property taxes, penalty fees and other funds owed to the town. The Superior Court ruled that the wording of the state law is unconstitutional — if applied in this case, Polonsky would be deprived of a $300,000 property for a $90,442 tax lien, the ruling states.

"The court finds no opportunistic motive or misconduct on the part of the town of Bedford; nonetheless, the scheme in place allows a municipality to receive a benefit beyond what it is entitled by delaying a sale," states the Hillsborough County Superior Court order by Justice Diane M. Nicolosi. Noting that the prior owner cannot compel the town to sell the property within the three-year window, the state law "violates the takings clause of the New Hampshire Constitution," the ruling states.

The case previously has been heard in New Hampshire Supreme Court, which had ruled in favor of the town of Bedford while citing the state law pertaining to the three-year period. At the same time, the Supreme Court sent the case back to the county's Superior Court to address some questions and review the constitutionality of the law as it pertains to this case.

According to the New Hampshire Municipal Association, "How wide an impact this decision will have is not yet known ... it is possible that the New Hampshire Supreme Court will agree with the Superior Court's decision. If that occurs, it is not yet clear what, if any, retroactive application that decision will have and what rules municipalities which sell tax deeded properties more than three years after deeding will have to follow."