Pennsylvania Upset Tax Sale Explained — Notice Rules, Lien Survival, and the 2-Year Threshold
If your property is on a Pennsylvania county Tax Claim Bureau's list for an upcoming Upset Sale — typically held annually in September across Montgomery, Delaware, and most other Pennsylvania counties — this is the page that explains exactly what is about to happen, what protections you have, and what time you actually have to act.
The Upset Sale is the first stage of Pennsylvania's two-stage tax sale system under the Real Estate Tax Sale Law (RETSL). It is conducted by the county Tax Claim Bureau, governed by 72 P.S. § 5860.601-609, and happens in 65 of Pennsylvania's 67 counties (Allegheny and Philadelphia operate under different systems).
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The 2-Year Eligibility Threshold
A property is eligible for the Upset Sale only after at least two years of property tax delinquency. Year 1 delinquent triggers penalties and interest under PA county procedure. Year 2 makes the property eligible for the Upset Sale list. The Tax Claim Bureau has discretion about exactly when to include a particular parcel on the list, but two years is the statutory floor. See RETSL at 72 P.S. § 5860.101 et seq. for the framework.
Notice Requirements Before the Upset Sale
Pennsylvania's Upset Sale notice rules are strict — and they are real. Defective notice is one of the most common (and most successful) bases for voiding a tax sale on appeal.
- Certified mail to the owner at least 30 days before the sale (72 P.S. § 5860.602).
- If no return receipt is obtained, first-class mail at least 10 days before the sale (72 P.S. § 5860.602).
- Newspaper publication in two newspapers of general circulation in the county PLUS one publication in the county legal journal, at least 30 days before the sale (72 P.S. § 5860.602(e)).
- Property posting at least 10 days before the sale (72 P.S. § 5860.602(e)(3)).
- The big one for owner-occupied properties: personal service of written notice at least 10 days before the sale (72 P.S. § 5860.601(a)(3)). Failure to personally serve an owner-occupied property can void the sale.
- If the Tax Claim Bureau's mailed notice is returned without the required signature or other circumstances raise doubt about whether the owner received notice, the bureau must make reasonable efforts to locate the owner and provide notice (72 P.S. § 5860.607a).
The owner-occupied personal service rule is genuinely powerful. In McKelvey v. Westmoreland County Tax Claim Bureau, 983 A.2d 1271 (Pa. Commw. Ct. 2009), the Commonwealth Court of Pennsylvania affirmed voiding a tax sale because the bureau failed to personally serve the owner — even though the owner had actual notice of the sale. The court reasoned that the legislature drew a distinction between owners who stand to lose property and owners who stand to lose their home, and the personal service rule reflects that distinction. If you are owner-occupied, talk to a Pennsylvania attorney about whether the notice procedure was followed correctly.
The Upset Price — What Has to Be Bid for the Property to Sell
Under 72 P.S. § 5860.605, the Upset Sale has a minimum opening bid called the 'upset price.' The upset price is the back taxes, penalties, interest, sale costs, and any prior judgments and liens that have priority over the taxes. If no bidder meets the upset price, the property does not sell at the Upset Sale.
This is a strategically important fact. Most Pennsylvania residential properties — especially Main Line and Mont. Co. homes with intact mortgages — do not actually sell at Upset Sale. The upset price plus the assumption of the surviving mortgage debt usually exceeds what arms-length investors are willing to pay. The result is that the property goes unsold at the Upset Sale, the Tax Claim Bureau petitions for a Judicial Sale, and the equity-destroying second stage begins.
What Liens Survive the Upset Sale
Properties sold at Upset Sale are conveyed SUBJECT TO existing liens. That means mortgages, judgments, mechanics' liens, federal tax liens, and other recorded encumbrances remain attached to the property after the sale. A buyer at Upset Sale takes title subject to all of that. This is why the Upset Sale rarely produces a clean transaction on a residential property with a meaningful mortgage.
The practical implication for owners: at the Upset Sale stage, your mortgage lender's interest is protected. The lender may decide to pay the back taxes itself — adding them to your loan balance and creating an escrow demand on you — to protect its lien. This is not automatic, but it does happen. Talk to your servicer.
How a Cash Sale Fits Pre-Upset Sale
Selling before the Upset Sale is the cleanest equity-preservation move in the entire Pennsylvania tax-sale process. A cash sale closes in 7-14 days, pays off the back taxes at closing, pays off the mortgage, and leaves the remaining equity in your pocket. No auction. No court. No surprises. Schuylkill Home Investors coordinates directly with the county Tax Claim Bureau and a licensed Pennsylvania title company so closing happens cleanly.
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