City of Philadelphia v. T. Phan and DMB Investments, LLC
148 A.3d 962
| Pa. Commw. Ct. | 2016Background
- Phan owned 5311 N. 5th St., a single building with commercial space on the first floor and a residential apartment on the second floor; the parties stipulated the apartment was continuously occupied for the statutory period.
- The City obtained a tax judgment and the property sold at sheriff's sale to DMB for $46,000; sheriff's deed acknowledged June 10, 2014 and recorded August 15, 2014.
- Phan filed a timely petition (Oct. 9, 2014) to set aside the sale and alternatively to redeem under 53 P.S. §7293; the trial court denied setting aside and issued a rule to show cause on redemption.
- Trial court granted redemption, ordered Phan to reimburse DMB the bid plus 10% interest ($49,833), but denied reimbursement for repair/maintenance costs ($37,952.96) because DMB presented no evidence of actual payment.
- DMB appealed arguing: (1) mixed-use/commercial status or vacancy bars redemption; (2) occupancy was not by the owner or same family unit; (3) Phan’s unclean hands (no rental licenses) bars relief; and (4) trial court erred in denying reimbursement for repairs.
- Commonwealth Court affirmed redemption (property not vacant given residential occupancy), rejected unclean-hands and owner-occupancy arguments, but remanded to allow DMB to prove actual, reasonable repair payments and ordered reimbursement of three undisputed payments totaling $2,763.60.
Issues
| Issue | Plaintiff's Argument (Phan) | Defendant's Argument (DMB) | Held |
|---|---|---|---|
| Whether a mixed-use property with a residential unit is "vacant" and thus ineligible for redemption | Property is non-vacant because the apartment was continuously occupied for the statutory period; redemption statute applies | Mixed-use/commercial classification prevents redemption unless entire property is occupied "as a residence" | Rejected DMB; any residential occupancy suffices to avoid "vacant" label and permit redemption |
| Whether occupancy must be by the owner or same family unit | Owner occupancy not required; statute permits occupancy "by the same individual or basic family unit," and tenant qualifies as an "individual" | Property is vacant because neither owner nor family occupied it; unrelated commercial and residential tenants do not satisfy statute | Rejected DMB; owner need not occupy; residential tenant occupancy satisfied "same individual" requirement |
| Whether equitable doctrine of unclean hands (lack of rental licenses) precludes statutory redemption | Statutory right to redeem does not condition relief on obtaining rental licenses; unclean hands inapplicable to statutory redemption | Phan lacked required rental licenses, so equitable relief should be denied | Rejected DMB; no authority to apply unclean hands to bar statutory redemption and statute contains no licensing prerequisite |
| Whether purchaser (DMB) is entitled to reimbursement for repairs and other expenses without proof of actual payment | DMB seeks reimbursement for repairs shown by invoices/photos and requests "reasonable value" even if not paid; contends denial is unjust | Phan: statute requires "actually paid"; repairs after notice of redemption should not be reimbursed | Court: reimbursement requires proof of actual payment and reasonableness; remanded for DMB to prove payments by preponderance; awarded $2,763.60 (taxes/refuse/stove) but denied unproven repair claims |
Key Cases Cited
- City of Philadelphia v. F.A. Realty Investors Corp., 95 A.3d 377 (Pa. Cmwlth.) (redemption limited to non-vacant property occupied as a residence)
- Brentwood Borough Sch. Dist. v. HSBC Bank USA, 111 A.3d 807 (Pa. Cmwlth.) (fact-intensive, multi-factor inquiry on whether property is "continuously occupied as a residence")
- City of Philadelphia v. Philadelphia Scrapyard Properties, LLC, 132 A.3d 1060 (Pa. Cmwlth.) (investment/rental property may qualify for redemption when occupancy requirement met)
- City of Philadelphia v. King Kai Chin, 511 A.2d 214 (Pa. Super. 1986) (purchaser entitled to reimbursement for reasonable amounts actually expended; burden to prove amounts paid and reasonableness)
- Lamm v. Fisher, 903 A.2d 1259 (Pa. Super. 2006) (mixed-use property denial where residential floors conceded unoccupied; not controlling here because occupancy was disputed/waived)