E-Alert Case Updates

Leaning Toward Strict Adherence to Statutory Notice Requirements for Property Liens

Crusader as Custodian for Strategic Municipal Lien Investments, LLC v. Charles E. Heyward, et al.
Appeal No. 09-CV-1414 (D.C. 2011)
by Imran O. Shaukat, Summer Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recently issued opinion, the Court of Appeals for the District of Columbia concluded that failure to notify a property owner of his right of redemption was a significant statutory defect that warranted nullification of a water and sewage lien. Specifically, the Court held that Crusader as Custodian for Strategic Municipal Lien Investments, LLC’s (“Crusader”) lien on Charles E. Heyward’s (“Heyward”) property was void when Crusader failed to strictly adhere to the statutory notice requirements.

In 1992, Heyward purchased real property in the northeast quadrant of the District of Columbia. By June 1996, the District of Columbia had a lien on Heyward’s property for unpaid water and sewer charges. The Water and Sewer Administration of the District of Columbia Department of Public Works (“WSA”) issued a Certificate of Delinquent Water/Sewer Charges (“Certificate”) to Heyward. Although the lien was for Heyward’s property located on 715 Irving Street, N.E., the Certificate was mailed to 715 Irving Street, N.W.

After a number of conveyances and assignments of the interest in the unpaid water and sewer charges, Crusader became the substituted successor-in-interest. One of Crusader’s predecessors-in-interest filed the instant complaint to foreclose Heyward’s right of redemption as to the lien on the property. Heyward argued, inter alia, that the delivery of the Certificate to the wrong address constituted a failure to give notice. The trial court, agreeing with Heyward, determined that the lien was void because Crusader sent the notice to the wrong address, thereby failing to notify Heyward of his statutory right to redeem his property.

On appeal, the Court of Appeals for the District of Columbia affirmed the trial court’s decision. First, the Court found that the original sale of the lien to one of Crusader’s predecessors-in-interest did not comport with the statutory requirement that the document state Heyward’s name and the amount due. Second, although the Court had not previously ruled that a lien was void when a party fails to strictly adhere to the statutory notice requirements, the Court recognized that other jurisdictions follow this principle. Persuaded by this authority, the Court nullified the lien, concluding that Crusader’s failure to notify Heyward of his right of redemption was a significant statutory defect, which violated public policy.