Baltimore is fixing its tax sales. This city teacher might lose his house anyway.

A Baltimore public school teacher missed the 2023 tax payment on his rental property. That landed it on the city’s tax sale list, which investors pore over for the chance to turn an easy profit.

One of the investors paid the $1,770 tax debt on the teacher’s three-bedroom Druid Hill-area row house and moved to take ownership of it through foreclosure.

The homeowner settled his bill before that could happen.

But there was a problem: The city mistakenly applied the homeowner’s payment to the wrong tax year, and the house went into foreclosure anyway.

Now the city’s lawyers are trying to help reverse the judgment. An assistant city solicitor acknowledged in court documents that “administrative errors” sent the Northwest Baltimore home into an ownership limbo.

“I thought I had done what I needed to do to get released,” said Joel Pally, a chemistry teacher at Western High School, who uses the property as a rental home and lives in Reservoir Hill.

Tax sales have long vexed Baltimore homeowners, thousands of whom fall behind on their bills each year and have their debts auctioned to investors. The third-party debt collectors can then move to take possession of the homes through foreclosure. To reclaim their properties, homeowners must pay back the investors with fees and interest. The U.S. Supreme Court has upheld the practice.

It’s an effective way for counties and cities to recover much-needed tax revenues and address delinquent properties, proponents say.

Homeowners who lose their homes with outstanding liens often are entitled to recoup just a fraction of the home’s value. That means that a relatively small tax bill — sometimes amounting to just a few hundred dollars — can put at risk tens or hundreds of thousands of dollars’ worth of property and equity.

Facing public pressure and a federal tax sale lawsuit, Baltimore has worked to simplify the process, such as by raising the minimum bid at auction and creating payment plans for those who have trouble staying current on their bills.

In its unanimous ruling last month, the Supreme Court said the tax sale system generally works so long as the tax sale auction is conducted “fairly.” A lower court will decide what counts as a fairly conducted auction.

Pally’s case began in May 2024, when his rental house went to tax sale over the $1,770 lien. He acknowledged that he had forgotten to pay his 2023 tax bill but said he paid it after receiving notice.

In September 2025, Pally wrote a check for about $2,200 to cover the 2023 debt and accrued interest, court records show. Instead, the city applied that payment to the 2025 tax year — which he had already paid.

The city’s error allowed Weeping Cherry LLC, based in Pikesville, to officially foreclose on the house the following month, and in late January, the company moved to evict Pally’s tenant and take control of the house.

From the tenant, Pally learned that he, like others before him, had “slipped through the cracks.” A city attorney filed an emergency motion in February asking a judge to void the foreclosure.

City officials say these situations are rare, and that most tax sale cases resolve before foreclosure. But there have been problems, including at the state level: A 2023 Banner investigation found that out of 10,000 properties with liens, some 6,300 were likely misclassified by the Maryland Department of Assessments and Taxation as non-owner-occupied, which can lead to problems accessing certain tax credits.

Weeping Cherry, in court filings, argued that it should be allowed to keep the house in spite of the city’s mistake. Attorney Mayer Engelsberg argued that while Pally may have paid all the taxes owed, he failed to satisfy a number of smaller environmental citations attached to the property, including for high grass and weeds.

That means the house was not “fully redeemed” at the time of the judgment, Engelsberg argued. He declined to elaborate when reached for comment.

In March, Baltimore City Circuit Court Judge Alan C. Lazerow struck down Weeping Cherry’s attempt to gain possession of the house and asked the city to clarify whether Pally had cleared his debts.

In an affidavit submitted to the court, Tammy Hollie, a Department of Finance collections supervisor, said Pally had in fact paid all that was owed at the time.

That was in early May. Pally is awaiting a decision.

He bought the home mortgage-free, using money received from a settlement payout to his family after the death of his sister, a University of Connecticut student who was run over by an emergency vehicle in 2016. In hindsight, Pally said that having no monthly payment made it easier to forget to stay on top of his tax bills.

Pally has been surprised by Weeping Cherry’s commitment to taking the house.

“It’s been a really stressful situation,” he said, “an unnecessarily stressful situation.”