PRINTER'S NO. 3434
No. 2408 Session of 1984
INTRODUCED BY D. W. SNYDER, JUNE 29, 1984
REFERRED TO COMMITTEE ON FINANCE, JUNE 29, 1984
AN ACT
1 Providing for the payment of State and municipal tax liens and
2 claims and certain delinquent real property taxes from the
3 proceeds of fire insurance policies in certain circumstances.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Tax Lien
8 Collection Law.
9 Section 2. Definitions.
10 The following words and phrases when used in this act shall
11 have the meanings given to them in this section unless the
12 context clearly indicates otherwise:
13 "Delinquent real property taxes." Taxes that have been
14 levied upon real property and have not been paid by the end of
15 the fiscal year in which the taxes were levied.
16 "Tax Claims Bureau." The bureau created by the act of July
17 7, 1947 (P.L.1368, No.542), known as the Real Estate Tax Sale
18 Law.
1 "Taxing jurisdictions." The Commonwealth and any county,
2 city, borough, town, township, home rule municipality or school
3 district.
4 Section 3. Designation of insurance proceeds.
5 (a) Mandatory contract provision.--From and after the
6 effective date of this act all insurance contracts covering loss
7 for fire or explosion, or both, entered into or renewed shall
8 contain a provision requiring that the proceeds of any insurance
9 policy based upon a claim made for damage or loss to a building
10 or other structure, except owner occupied one or two family
11 residential dwellings, caused by or arising out of any fire or
12 explosion be first applied to satisfy State and municipal tax
13 liens, claims and delinquent real property taxes, except as
14 otherwise specified in this act.
15 (b) Summary of law included.--All insurance companies
16 issuing policies covering loss for fire or explosion, or both,
17 after the effective date of this act shall include a summary of
18 this act, the text of which shall be approved by the Insurance
19 Commissioner. By entering into a contract of insurance with such
20 a provision, the insured and the insurer shall be deemed to have
21 agreed to all lawful procedures pursuant to this act.
22 Section 4. Provisions.
23 (a) Lien certificate required.--Except as otherwise provided
24 in this act, no insurance company shall pay a claim in excess of
25 $10,000 made for damage or loss to a building or other
26 structure, except owner occupied one or two family residential
27 dwellings, caused by or arising out of any fire or explosion
28 until the insurance company has obtained from the prothonotary
29 or similar officer in home rule charter counties and the
30 director of the tax claims bureau of the county in which the
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1 insured property is located, a lien certificate, on a form
2 prescribed by the Insurance Commissioner, certifying that:
3 (1) no State or municipal tax liens or claims have been
4 filed against the insured property; or
5 (2) a listing of the types and amounts of any and all
6 State and municipal tax liens and claims that have been filed
7 against the insured property.
8 (b) Time to request lien certificate.--The insurance company
9 shall request the lien certificate within 15 days of the date
10 the company receives notice of loss from the insured.
11 (c) Advertising required in certain counties.--In counties
12 not within the provisions of the act of July 7, 1947 (P.L.1368,
13 No.542), known as the Real Estate Tax Sale Law, or in counties
14 containing taxing jurisdictions not within the provisions of the
15 Real Estate Tax Sale Law, the prothonotary or other similar
16 officer in home rule charter counties shall, within 20 days of
17 receiving a request for a lien certificate on either the first
18 Tuesday of the month or the third Tuesday of the month, give
19 notice of the name of the property owner, the address of the
20 insured property and the taxing jurisdictions in which the
21 insured property is located in at least one newspaper of general
22 circulation within the county. To receive payment pursuant to
23 this act, any taxing jurisdiction with delinquent real property
24 taxes owing against such property shall notify the prothonotary
25 or other similar officer in home rule charter counties within 15
26 days of such notice. The claims shall be added to those liens
27 duly filed with the prothonotary or other similar officer in
28 home rule charter counties to become a part of the lien
29 certificate.
30 (d) Payment of liens.--Where the lien certificate indicates
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1 that State and municipal tax liens or claims have been filed,
2 the insurance company shall pay the amount of such liens to the
3 prothonotary or other similar officer in home rule charter
4 counties or the director of the tax claims bureau and also
5 provide the insured and any taxing jurisdictions that have filed
6 liens or claims with a copy of said lien certificate.
7 (e) Disposition of insurance proceeds.--If no liens or
8 claims have been filed or following the deduction of such
9 amounts specified above, the remainder of such insurance
10 proceeds shall be paid by the insurance company to the insured
11 or other individual in accordance with the provisions of the
12 contract.
13 (f) Deposit of proceeds.--The prothonotary or other similar
14 officer in home rule charter counties or the director of the tax
15 claims bureau shall deposit the amount of such liens in an
16 interest bearing escrow account for 120 days or until repayment
17 is waived by the taxing jurisdictions as set forth in section 5,
18 whichever comes first. Following the 120 days, the prothonotary
19 or other similar officer in home rule charter counties or the
20 director of the tax claims bureau shall distribute the amount of
21 such liens or claims to the proper taxing jurisdictions.
22 (g) Collection fee.--Where a State or municipal lien or
23 claim is collected pursuant to this section, the prothonotary or
24 other similar officer in home rule charter counties and the
25 director of the tax claims bureau shall deduct 2% of the amount
26 of the liens or claims paid to the Commonwealth or any taxing
27 jurisdiction. Except where otherwise specified, the prothonotary
28 or other similar officer in home rule charter counties and the
29 director of the tax claims bureau shall be entitled to retain
30 any accumulated interest.
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1 (h) Contested lien or claim.--Where the property owner has
2 contested a lien or claim in writing prior to the date of any
3 fire or explosion, a portion of the proceeds in the amount of
4 the contested lien or claim shall be deposited in a separate
5 interest bearing account by the prothonotary or other similar
6 officer in home rule charter counties or the director of the tax
7 claims bureau until the appeals process is completed. The
8 affected taxing jurisdictions and the insured shall be notified
9 and if the lien or claim is determined to be invalid, the amount
10 of the lien or claim and interest accrued shall be paid to the
11 insured within ten days after the termination of appeal.
12 Section 5. Waiver procedure.
13 (a) Waiver by taxing jurisdiction.--Within 90 days of the
14 fire or explosion, giving rise to proceeds subject to this act,
15 taxing jurisdictions may waive the provisions of this act as
16 they apply to State or municipal liens or claims filed by the
17 taxing jurisdiction if the insured provides satisfactory proof
18 to the taxing jurisdiction that the insured has rebuilt or will
19 rebuild on the site of the fire or explosion and enters into a
20 suitable agreement, in writing, with the taxing jurisdiction to
21 provide for the payment of outstanding liens or claims.
22 (b) Proof of intent to rebuild.--Satisfactory proof of
23 intention to rebuild may include, but shall not be limited to,
24 the issuance of a building permit or execution of a contract
25 between the insured and a builder or contractor to rehabilitate
26 or reconstruct the building or structure.
27 Section 6. Priority of liens and claims; interest.
28 (a) Priority.--Liens included within this act shall be
29 considered in the following priority but first mortgages shall
30 take precedence:
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1 (1) Tax liens duly filed with the prothonotary or other
2 similar officer in home rule charter counties pursuant to the
3 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform
4 Code of 1971.
5 (2) Claims for taxes returned to the tax claims bureau
6 pursuant to the act of July 7, 1947 (P.L.1368, No.542), known
7 as the Real Estate Tax Sale Law, or other delinquent real
8 property taxes for counties or municipalities not within the
9 Real Estate Tax Sale Law as provided for in section 4(a).
10 (3) Municipal tax liens duly filed with the prothonotary
11 or other similar officer in home rule charter counties
12 pursuant to the act of May 16, 1923 (P.L.207, No.153),
13 referred to as the Municipal Claim and Tax Lien Law, except
14 municipal claims filed pursuant to the act for municipal
15 improvements shall not be included. If the proceeds are
16 insufficient to pay all outstanding municipal liens, the
17 insurance proceeds shall be distributed on a pro rata basis.
18 (b) Interest to be added to claim.--Where authorized by
19 statute, interest on any lien or claim shall be considered part
20 of the amount due.
21 Section 7. Insurance companies.
22 (a) Taxing jurisdiction not a party to contract.--This act
23 shall not make any taxing jurisdiction a party to any insurance
24 contract nor shall the insurer be liable to any party for any
25 amount in excess of the proceeds otherwise payable under its
26 insurance policy.
27 (b) Immunity.--Insurers complying with this act or
28 attempting in good faith to comply with this act, shall be
29 immune from civil and criminal liability and such actions,
30 including releasing or disclosing any information pursuant to
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1 this act, shall not be deemed in violation of the act of July
2 22, 1974 (P.L.589, No.205), known as the Unfair Insurance
3 Practices Act.
4 (c) Liability in certain cases.--Where an insurance company
5 has failed to obtain a lien certificate pursuant to section 4,
6 the insurance company shall be liable for any unpaid liens or
7 claims that otherwise would have been payable pursuant to this
8 act.
9 Section 8. Rules, regulations and forms.
10 The Insurance Commissioner is authorized to issue rules and
11 regulations and prepare forms to implement this act.
12 Section 9. Effective date.
13 This act shall take effect in 120 days.
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