Siegel v. Money, 31 N.Y.2d 624 (1973)
When property is condemned before the expiration of a tax sale redemption period, the tax sale purchaser’s interest is limited to an equitable lien on the condemnation award, not ownership of the condemned property.
Summary
This case addresses the conflict between a tax lien and a subsequent condemnation proceeding. Siegel and Kessler owned property that was sold for unpaid taxes. Before the redemption period expired, Nassau County condemned the land. After the condemnation, the tax sale purchaser’s successors, the Moneys, obtained a tax deed. The court had to determine who was entitled to the condemnation award: the original owners (Siegel and Kessler) or the tax sale purchasers (the Moneys). The court held that the condemnation extinguished the tax lien on the land, but substituted an equitable lien on the condemnation award. Thus, the original owners were entitled to the award, subject to the tax lien.
Facts
Respondents Siegel and Kessler owned real property in Freeport, NY.
The Village of Freeport sold the property at a tax sale to Edward Morse in 1964 for unpaid 1963 taxes.
Before the two-year redemption period expired, Nassau County condemned the property in July 1964.
In 1967, the appellants, as executors of Morse’s estate, obtained a tax sale deed from the village.
Respondents filed a claim in the condemnation proceeding, asserting ownership.
A title search revealed the appellants’ tax sale deed.
Procedural History
Respondents moved in the condemnation proceeding to determine ownership of the condemnation award.
Special Term held that respondents, as owners of record at the time of condemnation, were entitled to the award, subject to tax liens.
The Appellate Division affirmed.
The case was appealed to the New York Court of Appeals.
Issue(s)
Whether ownership in condemned real property lies with the owner of record at the time of condemnation, or with the purchaser at a tax sale held before condemnation who obtains a title deed to the property after the condemnation.
Holding
No, because the tax sale purchaser only acquires a lien interest until the redemption period expires; condemnation vests full title in the condemnor and extinguishes the tax lien on the property itself, substituting an equitable lien on the condemnation award.
Court’s Reasoning
The court reasoned that under the Real Property Tax Law, the tax sale purchaser acquires only a lien interest, not title, until the redemption period expires. The court distinguished its prior decision in Matter of Ueck, noting that the statutes in that case referred to the land as “sold” and “purchased” at the tax sale. In contrast, the Real Property Tax Law identifies the tax sale certificate as evidencing a lien.
The court emphasized that condemnation vested full title in Nassau County before the expiration of the redemption period. Therefore, the appellants held only a tax lien at the time of the taking. Condemnation extinguished all lien interests in the property itself.
However, the court also stated that the tax lien was substituted by an equitable lien on the proceeds of the condemnation award. The court cited precedent such as Copp v. Sands Point Marina, 17 N.Y.2d 291, 293, emphasizing that while the tax lien on the property is extinguished, the tax sale purchaser retains a right to the condemnation proceeds to the extent of the tax lien and interest. The court noted that the appellants could assert their equitable lien when the condemnation award is apportioned.
In conclusion, the tax sale deed obtained by the appellants was deemed invalid because title vested in Nassau County before the redemption period expired and while the tax was only a lien.