About Private Tax Collection, the MCTLA, and Homeowner Rights in Pennsylvania

1. What is the Municipal Claim and Tax Lien Law (MCTLA)?

The Municipal Claim and Tax Lien Law is a Pennsylvania statute originally written to help municipalities collect municipal claims—such as utility charges or improvement assessments.

Over the years, amendments (1996 and 2003) expanded the law so private attorneys could collect real estate taxes and add “reasonable” attorney fees to the lien.

Homeowners often do not realize that the MCTLA was not originally designed for property taxes, and today it is commonly used by private collection firms.

2. What is the difference between the MCTLA and the Real Estate Tax Sale Law (RETSL)?

Pennsylvania has two different systems for handling delinquent real estate taxes:

RETSL (Tax Claim Bureau)

• Run entirely by government

• Provides multi-year redemption periods

• Has fixed fees, including a standard 5% commission

• Conducts sheriff/ upset sales under strict legal rules

• Most counties use this as their normal delinquent tax procedure

MCTLA (Private collectors)

• Allows private law firms to handle delinquent tax collection

• Fees are not fixed; they include attorney fees, costs, interest, penalties, and administrative charges

• Litigation is frequently used as a collection tool

• The process is often more aggressive and expensive for homeowners

3. Why do municipalities hire private law firms to collect taxes?

Private firms pitch their services as a way to “get taxes faster” and “shift fees to the delinquent taxpayer.”

However, the tax sale timeline does not change, and municipalities already have a public system—the Tax Claim Bureau—designed for this purpose.

In many cases, the only real difference is that homeowners face significant additional fees that go to the private collection firm.

4. Does outsourcing tax collection actually increase revenue for the school district or borough?

Not necessarily.

Here’s why:

• The county still takes its 5% commission under RETSL.

• Private firms take attorney fees, filing fees, costs, and interest before the district receives money.

• At tax sale, private liens are typically paid in fourth priority, which means the district may receive less than expected.

Many districts discover that private collection does not solve revenue issues—it simply shifts the financial burden onto struggling homeowners.

5. Why do debts grow so quickly under private collection?

Under the MCTLA, private collectors may add:

• Attorney fees

• Court filing costs

• Interest calculated on an inflated base

• Administrative charges

• Municipal penalties

A small original tax—such as $400–$700—can easily become $2,000 to $3,000 after several rounds of fees.

Private collectors also often file multiple legal actions, adding hundreds of dollars each time.

6. Who is most affected by private tax collection practices?

Homeowners who are:

• Elderly

• Low-income

• Recently widowed or disabled

• Living on fixed incomes

• Owners of mortgage-free homes (no escrow to pay taxes automatically)

These residents are statistically more vulnerable to a sudden bill increase and more likely to face aggressive collection strategies.

7. Can a private firm take my home?

Private firms themselves do not conduct the tax sale.
However, their actions can push a property into sheriff sale by increasing the lien amount, adding fees, and initiating the legal steps that lead to execution.

The sheriff sale process itself is governed by state law, but the pressure and escalation often begin with private-collector filings.

8. Are there limits to the attorney fees private collectors can charge?

The law only states that fees must be “reasonable” and not “inappropriate or unnecessary.”

It does not set dollar caps, hour caps, or detailed standards.

This lack of clear limits is one of the most common complaints from homeowners and municipal advocates.

9. Is delegating tax collection to private firms legal?

Yes, courts have upheld the basic legality of using private firms under the MCTLA.

However, even if legal, many communities believe it is poor public policy because:

• Tax collection is a core government function

• Private collectors profit from increasing fees

• The process lacks transparency

• Vulnerable homeowners face severe financial pressure

Legality and wisdom are not the same thing.

10. Why is transparency such a problem with private tax collection?

Common issues include:

• Missing or unverifiable resolutions authorizing the contract

• Lien assignments to little-known entities

• Delays or denials in Right-to-Know (RTK) requests

• Contracts that “auto-renew” for years

• No public meeting records for assignee entities

• Inconsistent or conflicting information from agencies or collectors

Tax collection should be the most transparent part of local government—not the least.

11. What happens if my district uses private collection but I want to pay through the county?

Even if the school district uses a private law firm, the county Tax Claim Bureau still maintains authority to sell the property for unpaid county taxes and still receives its statutory fees.

This creates a confusing system where:

• Two different entities may be collecting on the same property

• The private firm's fees attach to the lien

• The homeowner has difficulty determining who is owed what

• Payment priorities become unclear

This confusion is a major reason many homeowners support returning collection entirely to the Tax Claim Bureau.

12. What can residents do to change this system?

Residents can:

• Speak at school board and council meetings

• Request that districts stop outsourcing collections

• Support resolutions to return delinquent taxes to the Tax Claim Bureau

• Demand transparency, public bidding, and fee limits

• Request audits of private collection programs

• Educate neighbors so they understand their rights

Community awareness is the strongest tool for reform.

13. What is your organization’s mission?

New C Word’s  goal is to educate homeowners, promote transparency, and advocate for fair and accountable tax collection practices in Pennsylvania.

We support:

• Government—not private firms—handling tax collection

• Clear limits on fees

• Public access to contracts, assignments, and policies

• Protection for seniors and vulnerable homeowners