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Polonsky v. Town of Bedford (2020)

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Polonsky v. Town of Bedford (2020)

Citation: 173 N.H. 226 (2020); No. 2019-0339 · Court: Supreme Court of New Hampshire · Argued: February 13, 2020 · Opinion issued: April 24, 2020 · Author: Justice Donovan

New Hampshire’s controlling state-constitutional surplus-equity ruling, decided three years before tyler-v-hennepin-county. The court held that RSA 80:89, VII, which terminates a municipality’s duty to pay excess proceeds from the sale of tax-deeded property three years after the deed is recorded, violates Part I, Article 12 of the New Hampshire Constitution (the state takings clause) by allowing the municipality to keep equity exceeding the tax debt. See new-hampshire, surplus-funds.

Facts

Richard Polonsky inherited property in Bedford in 2008 (assessed at $309,900). He failed to pay real estate taxes for 2008, 2009, and 2010; tax liens were imposed, and when he did not redeem, the tax collector issued a tax deed conveying the property to the Town on May 31, 2011 (recorded June 8, 2011). The Town did not sell the property; it sent repurchase notices (back taxes, interest, costs, and penalties totaling$90,442.42, later $94,271.93). After more than three years passed, the Town took the position that under RSA 80:89, VII its duty to provide excess proceeds — and Polonsky’s right to repurchase — had terminated.

Polonsky sued, arguing that keeping excess proceeds from an eventual sale violated his right to equity under Part I, Article 12. The trial court (Nicolosi, J.) on remand found a taking occurred when the tax deed issued and held that RSA 80:89, VII “violates the takings clause of the New Hampshire Constitution,” awarding Polonsky the excess proceeds of an eventual sale. The Town appealed. (An earlier appeal, “Polonsky I,” 171 N.H. 89 (2018), construed RSA 80:89, VII to bar a post-three-year claim and remanded the constitutional question.)

Holding

“[W]e conclude that the termination under RSA 80:89, VII of the municipality’s duty to provide excess proceeds three years after the date of the recording of the tax deed violates Part I, Article 12 of the New Hampshire Constitution.”

The court affirmed, reasoning that “when a municipality acquires property by tax deed that is worth more than the amount owed, the municipality is required to provide compensation to the former owner,” and “[t]he takings clause … does not require a former owner to take any action to receive that compensation.” The court emphasized its ruling is narrow — it does not invalidate the rest of the statutory scheme (including the three-year repurchase limitation and notice requirements).

Reasoning

  • Taking on tax deed. Assuming (as the parties agreed) that a taking occurs when the tax collector executes the deed, just compensation is owed when the equity exceeds the amount owed — citing Thomas Tool Servs. v. Town of Croydon, 145 N.H. 218 (2001), and Justice Horton’s seminal concurrence in First NH Bank v. Town of Windham, 138 N.H. 319 (1994).
  • No statutory forfeiture-by-inaction. RSA 80:89, VII “places no obligation upon the former owner to bring an action … as a prerequisite to receiving the excess proceeds”; it simply terminates the municipality’s duties. Reading it as a statute of limitations requiring suit “does not support such a construction” and would contradict RSA 80:91 (nothing requires a municipality to dispose of tax-deeded property).
  • No constitutional mandate for the Town’s remedy. Unlike the due-process notice rule of First NH Bank (mailed notice to mortgagees), there is no constitutional mandate requiring a former owner to act to receive takings compensation; “there is no constitutional mandate for the remedy the Town seeks.”
  • Equitable relief affirmed. The court rejected the Town’s unclean-hands defense; failure to pay taxes or repurchase does not forfeit the equity, because “the taking of property without just compensation is unconstitutional, even when the municipality has taken the property by tax deed due to the former owner’s failure to pay taxes.”

Practical impact

  • For former owners: A New Hampshire former owner whose tax-deeded property was (or will be) sold for more than the debt is entitled to the excess proceeds, and the three-year cutoff cannot extinguish that constitutional right.
  • For investors / municipalities: Towns holding tax-deeded property cannot rely on the RSA 80:89, VII cutoff to retain windfall equity. The RSA 80:90 10% penalty remains an open excessive-fine question post-Tyler (Gorsuch concurrence). See surplus-funds.

Good-law status

Still good law. Decided April 24, 2020; not overruled or limited as of last_verified 2026-06-02. It is New Hampshire’s controlling state-constitution surplus precedent, predating and harmonizing with Tyler.

Why it matters

Polonsky shows a state high court reaching Tyler’s result under its own constitution before the U.S. Supreme Court — like Michigan’s rafaeli-v-oakland-county-2020, decided the same year — establishing that the surplus-equity protection has independent state-law roots.

Applies in →

new-hampshire (binding state precedent). Persuasive on state-constitution surplus-takings theory.

Legal information, not legal advice. This page summarizes a court decision for educational purposes and does not create an attorney-client relationship. Verify against the primary opinion and consult a licensed attorney in the relevant jurisdiction before acting. Last verified 2026-06-02.

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