Land Use Permits & Recorded Tax Liens

Training for: Legal Notes

A while back we opined that land use permits cannot be withheld simply because there are delinquent taxes on the property (see “Land Use Permits & Delinquent Taxes,” Maine Townsman, Legal Notes, January 2015). Our reasoning, which we still believe is sound, is that there is no apparent rational nexus or connection (as there must be for it to be legal) between unpaid taxes and the legitimate objectives of land use regulation, such as promotion of orderly growth and development, protection of neighborhoods and property values, conservation of the natural environment, and so forth.

Recently we were asked a different but related question: Does a property owner have legal standing to apply for a permit if there is a recorded tax lien on the property? We answered yes, based on the following analysis.

Legal standing to apply for a land use permit requires that the applicant have a legally enforceable “title, right or interest” in the property (see, e.g., Walsh v. City of Brewer, 315 A.2d 200 (Me. 1974)). A recorded tax lien is certainly a claim against and an encumbrance upon the property, but it does not result in a transfer of title until the lien has foreclosed. Thus, if the lien has not yet foreclosed, the delinquent taxpayer is still deemed the owner, and as such, they still have legal standing to apply for and receive a permit.

It would of course be a very different answer if the lien has in fact foreclosed, even if the taxing entity has not taken actual possession of the property. If the applicant no longer has legal title or any rights to the property, they have no standing to apply for a permit. This would be the case even if the applicant is purchasing the property on an installment plan unless the agreement clearly gives the purchaser the right to make improvements.

For more on standing where the applicant is not the owner, or at least not the sole owner, see “Standing for Co-Owners, Easement Holders, Lessees,” Maine Townsman, Legal Notes, August 2002. (By R.P.F.)

A while back we opined that land use permits cannot be withheld simply because there are delinquent taxes on the property (see “Land Use Permits & Delinquent Taxes,” Maine Townsman, Legal Notes, January 2015). Our reasoning, which we still believe is sound, is that there is no apparent rational nexus or connection (as there must be for it to be legal) between unpaid taxes and the legitimate objectives of land use regulation, such as promotion of orderly growth and development, protection of neighborhoods and property values, conservation of the natural environment, and so forth.

Recently we were asked a different but related question: Does a property owner have legal standing to apply for a permit if there is a recorded tax lien on the property? We answered yes, based on the following analysis.

Legal standing to apply for a land use permit requires that the applicant have a legally enforceable “title, right or interest” in the property (see, e.g., Walsh v. City of Brewer, 315 A.2d 200 (Me. 1974)). A recorded tax lien is certainly a claim against and an encumbrance upon the property, but it does not result in a transfer of title until the lien has foreclosed. Thus, if the lien has not yet foreclosed, the delinquent taxpayer is still deemed the owner, and as such, they still have legal standing to apply for and receive a permit.

It would of course be a very different answer if the lien has in fact foreclosed, even if the taxing entity has not taken actual possession of the property. If the applicant no longer has legal title or any rights to the property, they have no standing to apply for a permit. This would be the case even if the applicant is purchasing the property on an installment plan unless the agreement clearly gives the purchaser the right to make improvements.

For more on standing where the applicant is not the owner, or at least not the sole owner, see “Standing for Co-Owners, Easement Holders, Lessees,” Maine Townsman, Legal Notes, August 2002. (By R.P.F.)