ALBANY, N.Y. (CN) - A church failed to show that it deserved notice of a foreclosure on property it transferred to a pastor, albeit improperly, nearly 30 years ago, an appeals court ruled.
"A taxing authority's enforcing officer is not required to be a lawyer, title searcher or have special expertise in ferreting out errors in recorded deeds, nor have courts imposed unreasonable obligations on taxing authorities to perform burdensome research to discover potential interested parties," the Third Judicial Department for the New York State Supreme Court's Appellate Division found. "On its face, the public record here did not disclose that petitioner had any interest in the property."
The ruling comes in a challenge the First Church of God in Christ brought after the city of Hudson foreclosed on certain property for back taxes in 2012.
Hudson, one of the country's earliest chartered cities, sits on the Hudson River about two hours north of New York City. Its historical architecture and retail and cultural offerings make the community a popular weekend and second-home destination for Big Apple residents.
The foreclosed-upon property includes a mixed-use building on Warren Street in the downtown business district, with retail on the ground floor and apartments above, the Hudson Register-Star reported. It said $80,000 in back taxes were owed from 2008.
Instead of informing the church about the foreclosure, Hudson had given notice to its pastor, Godfrey Forbes, who is listed as the owner on public records.
After Hudson took the title to the downtown property, First Church petitioned Columbia County Supreme Court to set aside the foreclosure, arguing that the 1985 sale of the property to Forbes was invalid and it remained the owner.
The court denied the petition as untimely, and the Appellate Division affirmed on different grounds last week, saying that the church had a two-year window to bring its challenge.
Hudson's foreclosure still stands, however, because the city followed real-property tax law in using certified and first-class mail to notify the owner listed in the public record - Forbes - of the foreclosure.
This is the case even though the property's transfer to Forbes was invalid because neither the pastor nor the church sought approval of the deal from the courts or the state attorney general, as required by state nonprofit law.
"Where court approval is not obtained for the transfer of real property from a religious corporation, the conveyance is invalid," Justice William McCarthy wrote for a four-judge panel.
Precedence indicates that "reasonable notice to ascertainable interested parties" may be sufficient even if the "true owners" are not among them, the six-page ruling states.
"There is no constitutional requirement that actual owners of the property receive personal notice of a foreclosure proceeding," McCarthy wrote.
Hudson's treasurer affirmed that Forbes was listed on the tax rolls as the owner of the property, and a search of county deed books reveals the 1985 deal between the church and Forbes, according to the ruling.
Only a trained eye would have realized, however, that the transfer lacked the OK required under nonprofit law from the court and attorney general, McCarthy said.
"Indeed, while a title searcher noticed this problem with the 1985 deed in 2011, Forbes obtained two mortgages in 1985, apparently without anyone raising any concern regarding that same deed," the opinion states.
First Church acknowledged it tried to convey the property to Forbes and that neither side was aware of the requirements of nonprofit law on such transfers.
"Yet petitioner did not renounce its intent to transfer the property to Forbes, and did nothing to regain title during the ensuing 27 years, until it commenced this proceeding after Forbes was divested of title through the judgment of foreclosure," McCarthy wrote.
Under real-property tax law, the church was entitled to notice on the foreclosure only if it had a "right, title or interest [that] was a matter of public record," he added.
"Under the circumstances, including respondent's provision of proper statutory notice to the owner of record, respondent complied with due process and satisfied its obligation of searching for interested parties, and petitioner has not demonstrated that any additional steps or more exhaustive search was required here," McCarthy wrote.
Justices John Lahtinen, Elizabeth Garry and Robert Rose concurred.
Stephen Waite of Waite & Associates in Albany argued for First Church. Jessica DiFiore of Rapport Meyers in Hudson represented the city.