Bill Text: MI HB4219 | 2019-2020 | 100th Legislature | Introduced


Bill Title: Property tax; delinquent taxes; distribution of revenue from sale of foreclosure; modify. Amends sec. 78m of 1893 PA 206 (MCL 211.78m).

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2019-02-26 - Bill Electronically Reproduced 02/21/2019 [HB4219 Detail]

Download: Michigan-2019-HB4219-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 4219

 

 

February 21, 2019, Introduced by Reps. Howell, Eisen, Maddock, Wakeman, LaGrand, Hammoud, Camilleri, Hoadley, Pohutsky, Koleszar, Steven Johnson and Green and referred to the Committee on Local Government and Municipal Finance.

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending section 78m (MCL 211.78m), as amended by 2014 PA 501.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 78m. (1) Not later than the first Tuesday in July,

 

immediately succeeding the entry of judgment under section 78k

 

vesting absolute title to tax delinquent property in the

 

foreclosing governmental unit, this state is granted the right of

 

first refusal to purchase property at the greater of the minimum

 

bid or its fair market value by paying that amount to the

 

foreclosing governmental unit if the foreclosing governmental unit

 

is not this state. If this state elects not to purchase the

 

property under its right of first refusal, a city, village, or

 

township may purchase for a public purpose any property located

 


within that city, village, or township set forth in the judgment

 

and subject to sale under this section by payment to the

 

foreclosing governmental unit of the minimum bid. If a city,

 

village, or township does not purchase that property, the county in

 

which that property is located may purchase that property under

 

this section by payment to the foreclosing governmental unit of the

 

minimum bid. If property is purchased by a city, village, township,

 

or county under this subsection, the foreclosing governmental unit

 

shall convey the property to the purchasing city, village,

 

township, or county within 30 days. If property purchased by a

 

city, village, township, or county under this subsection is

 

subsequently sold for an amount in excess of the minimum bid and

 

all costs incurred relating to demolition, renovation,

 

improvements, or infrastructure development, the excess amount

 

shall be returned to the delinquent tax property sales proceeds

 

account for the year in which the property was purchased by the

 

city, village, township, or county or, if this state is the

 

foreclosing governmental unit within a county, to the land

 

reutilization fund created under section 78n. Upon the request of

 

the foreclosing governmental unit, a city, village, township, or

 

county that purchased property under this subsection shall provide

 

to the foreclosing governmental unit without cost information

 

regarding any subsequent sale or transfer of the property. This

 

subsection applies to the purchase of property by this state, a

 

city, village, or township, or a county prior to before a sale held

 

under subsection (2).

 

     (2) Subject to subsection (1), beginning on the third Tuesday


in July immediately succeeding the entry of the judgment under

 

section 78k vesting absolute title to tax delinquent property in

 

the foreclosing governmental unit and ending on the immediately

 

succeeding first Tuesday in November, the foreclosing governmental

 

unit, or its authorized agent, at the option of the foreclosing

 

governmental unit, shall hold 1 or more property sales at 1 or more

 

convenient locations at which property foreclosed by the judgment

 

entered under section 78k shall be sold by auction sale, which may

 

include an auction sale conducted via an internet website. Notice

 

of the time and location of a sale shall be published not less than

 

30 days before a sale in a newspaper published and circulated in

 

the county in which the property is located, if there is one. If no

 

newspaper is published in that county, publication shall be made in

 

a newspaper published and circulated in an adjoining county. Each

 

sale shall be completed before the first Tuesday in November

 

immediately succeeding the entry of judgment under section 78k

 

vesting absolute title to the tax delinquent property in the

 

foreclosing governmental unit. Except as provided in this

 

subsection and subsection (5), property shall be sold to the person

 

bidding the minimum bid, or if a bid is greater than the minimum

 

bid, the highest amount above the minimum bid. The foreclosing

 

governmental unit may sell parcels individually or may offer 2 or

 

more parcels for sale as a group. The minimum bid for a group of

 

parcels shall equal the sum of the minimum bid for each parcel

 

included in the group. The foreclosing governmental unit may adopt

 

procedures governing the conduct of the sale and the conveyance of

 

parcels under this section and may cancel the sale prior to before


the issuance of a deed under this subsection if authorized under

 

the procedures. The foreclosing governmental unit shall require

 

full payment at the close of each day's bidding or by a date not

 

more than 21 days after the sale. Before the foreclosing

 

governmental unit conveys a parcel sold at a sale, the purchaser

 

shall provide the foreclosing governmental unit with proof of

 

payment to the local tax collecting unit in which the property is

 

located of any property taxes owed on the parcel at the time of the

 

sale. A foreclosing governmental unit shall cancel a sale if unpaid

 

property taxes owed on a parcel or parcels at the time of a sale

 

are not paid within 21 days of the sale. If a sale is canceled

 

under this subsection, the foreclosing governmental unit may offer

 

the property to the next highest bidder and convey the property to

 

that bidder under this subsection, subject to the requirements of

 

this subsection for the highest bidder. Not more than 14 days after

 

payment to the foreclosing governmental unit of all amounts

 

required by the highest bidder or the next highest bidder under

 

this subsection, the foreclosing governmental unit shall convey the

 

property by deed to the person bidding the minimum bid, or if a bid

 

is greater than the minimum bid, the highest amount above the

 

minimum bid, or the next highest bidder if the sale to the highest

 

bidder is canceled and the next highest bidder pays the amount

 

required under this section to purchase the property. The deed

 

shall vest fee simple title to the property in the person bidding

 

the highest amount above the minimum bid, unless the foreclosing

 

governmental unit discovers a defect in the foreclosure of the

 

property under sections 78 to 78l or the sale is canceled under


this subsection or subsection (5). If this state is the foreclosing

 

governmental unit within a county, the department of treasury shall

 

be responsible for conducting the sale of property under this

 

subsection and subsections (4) and (5) on behalf of this state.

 

Before issuing a deed to a person purchasing property under this

 

subsection or subsection (5), the foreclosing governmental unit

 

shall require the person to execute and file with the foreclosing

 

governmental unit an affidavit under penalty of perjury. If the

 

person fails to execute and file the affidavit required by this

 

subsection by the date payment for the property is required under

 

this section, the foreclosing governmental unit shall cancel the

 

sale. An affidavit under this section shall indicate that the

 

person meets all of the following conditions:

 

     (a) The person does not directly or indirectly hold more than

 

a de minimis legal interest in any property with delinquent

 

property taxes located in the same county as the property.

 

     (b) The person is not directly or indirectly responsible for

 

any unpaid civil fines for a violation of an ordinance authorized

 

by section 4l of the home rule city act, 1909 PA 279, MCL 117.4l,

 

in the local tax collection unit in which the property is located.

 

     (3) For sales held under subsection (2), after the conclusion

 

of that sale, and prior to before any additional sale held under

 

subsection (2), a city, village, or township may purchase any

 

property not previously sold under subsection (1) or (2) by paying

 

the minimum bid to the foreclosing governmental unit. If a city,

 

village, or township does not purchase that property, the county in

 

which that property is located may purchase that property under


this section by payment to the foreclosing governmental unit of the

 

minimum bid.

 

     (4) If property is purchased by a city, village, township, or

 

county under subsection (3), the foreclosing governmental unit

 

shall convey the property to the purchasing city, village,

 

township, or county within 30 days.

 

     (5) All property subject to sale under subsection (2) shall be

 

offered for sale at 1 or more sales conducted as required by

 

subsection (2). If the foreclosing governmental unit elects to hold

 

more than 1 sale under subsection (2), the final sale held under

 

subsection (2) shall be held not less than 28 days after the

 

immediately preceding sale under subsection (2). At the final sale

 

held under subsection (2), the sale is subject to the requirements

 

of subsection (2), except that the minimum bid shall not be

 

required. However, the foreclosing governmental unit may establish

 

a reasonable opening bid at the sale to recover the cost of the

 

sale of the parcel or parcels, and the foreclosing governmental

 

unit shall require a person who held an interest in property sold

 

under this subsection at the time a judgment of foreclosure was

 

entered against the property under section 78k to pay the minimum

 

bid for the property before issuing a deed to the person under

 

subsection (2). If the person fails to pay the minimum bid for the

 

property and other amounts by the date required under this section,

 

the foreclosing governmental unit shall cancel the sale of the

 

property.

 

     (6) On or before December 1 immediately succeeding the entry

 

of judgment under section 78k, a list of all property not


previously sold by the foreclosing governmental unit under this

 

section shall be transferred to the clerk of the city, village, or

 

township in which the property is located. The city, village, or

 

township may object in writing to the transfer of 1 or more parcels

 

of property set forth on that list. On or before December 30

 

immediately succeeding the entry of judgment under section 78k, all

 

property not previously sold by the foreclosing governmental unit

 

under this section shall be transferred to the city, village, or

 

township in which the property is located, except those parcels of

 

property to which the city, village, or township has objected.

 

Property located in both a village and a township may be

 

transferred under this subsection only to a village. The city,

 

village, or township may make the property available under the

 

urban homestead act, 1999 PA 127, MCL 125.2701 to 125.2709, or for

 

any other lawful purpose.

 

     (7) If property not previously sold is not transferred to the

 

city, village, or township in which the property is located under

 

subsection (6), the foreclosing governmental unit shall retain

 

possession of that property. If the foreclosing governmental unit

 

retains possession of the property and the foreclosing governmental

 

unit is this state, title to the property shall vest in the land

 

bank fast track authority created under section 15 of the land bank

 

fast track act, 2003 PA 258, MCL 124.765.

 

     (8) A If the proceeds from the sale of a parcel of property

 

under this section exceed the minimum bid established for that

 

parcel of property, the foreclosing governmental unit shall remit

 

an amount equal to that excess to an individual if that individual


owned and occupied the parcel of property as a principal residence

 

exempt under section 7cc immediately before the entry of judgment

 

under section 78k vesting absolute title to the parcel of property

 

in the foreclosing governmental unit. The foreclosing governmental

 

unit shall deposit the all other proceeds from the sale of property

 

under this section into a restricted account designated as the

 

"delinquent tax property sales proceeds for the year ______". The

 

foreclosing governmental unit shall direct the investment of the

 

account. The foreclosing governmental unit shall credit to the

 

account interest and earnings from account investments. Proceeds in

 

that account shall only be used by the foreclosing governmental

 

unit for the following purposes in the following order of priority:

 

     (a) The delinquent tax revolving fund shall be reimbursed for

 

all taxes, interest, and fees on all of the property, whether or

 

not all of the property was sold.

 

     (b) All costs of the sale of property for the year shall be

 

paid.

 

     (c) Any costs of the foreclosure proceedings for the year,

 

including, but not limited to, costs of mailing, publication,

 

personal service, and outside contractors shall be paid.

 

     (d) Any costs for the sale of property or foreclosure

 

proceedings for any prior year that have not been paid or

 

reimbursed from that prior year's delinquent tax property sales

 

proceeds shall be paid.

 

     (e) Any costs incurred by the foreclosing governmental unit in

 

maintaining property foreclosed under section 78k before the sale

 

under this section shall be paid, including costs of any


environmental remediation.

 

     (f) If the foreclosing governmental unit is not this state,

 

any of the following:

 

     (i) Any costs for the sale of property or foreclosure

 

proceedings for any subsequent year that are not paid or reimbursed

 

from that subsequent year's delinquent tax property sales proceeds

 

shall be paid from any remaining balance in any prior year's

 

delinquent tax property sales proceeds account.

 

     (ii) Any costs for the defense of title actions.

 

     (iii) Any costs incurred in administering the foreclosure and

 

disposition of property forfeited for delinquent taxes under this

 

act.

 

     (g) If the foreclosing governmental unit is this state, any

 

remaining balance shall be transferred to the land reutilization

 

fund created under section 78n.

 

     (h) In 2008 and each year after 2008, if the foreclosing

 

governmental unit is not this state, not later than June 30 of the

 

second calendar year after foreclosure, the foreclosing

 

governmental unit shall submit a written report to its board of

 

commissioners identifying any remaining balance and any contingent

 

costs of title or other legal claims described in subdivisions (a)

 

through (f). All or a portion of any remaining balance, less any

 

contingent costs of title or other legal claims described in

 

subdivisions (a) through (f), may subsequently be transferred into

 

the general fund of the county by the board of commissioners.

 

     (9) Two or more county treasurers of adjacent counties may

 

elect to hold a joint sale of property as provided in this section.


If 2 or more county treasurers elect to hold a joint sale, property

 

may be sold under this section at a location outside of the county

 

in which the property is located. The sale may be conducted by any

 

county treasurer participating in the joint sale. A joint sale held

 

under this subsection may include or be an auction sale conducted

 

via an internet website.

 

     (10) The foreclosing governmental unit shall record a deed for

 

any property transferred under this section with the county

 

register of deeds. The foreclosing governmental unit may charge a

 

fee in excess of the minimum bid and any sale proceeds for the cost

 

of recording a deed under this subsection.

 

     (11) For property transferred to this state under subsection

 

(1), a city, village, or township under subsection (6) or retained

 

by a foreclosing governmental unit under subsection (7), all taxes

 

due on the property as of the December 31 following the transfer or

 

retention of the property are canceled effective on that December

 

31.

 

     (12) For property sold under this section, transferred to this

 

state under subsection (1), a city, village, or township under

 

subsection (6), or retained by a foreclosing governmental unit

 

under subsection (7), all liens for costs of demolition, safety

 

repairs, debris removal, or sewer or water charges due on the

 

property as of the December 31 immediately succeeding the sale,

 

transfer, or retention of the property are canceled effective on

 

that December 31. This subsection does not apply to liens recorded

 

by the department of environmental quality under this act or the

 

land bank fast track act, 2003 PA 258, MCL 124.751 to 124.774.


     (13) If property foreclosed under section 78k and held by or

 

under the control of a foreclosing governmental unit is a facility

 

as defined under section 20101 of the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.20101, prior to

 

before the sale or transfer of the property under this section, the

 

property is subject to all of the following:

 

     (a) Upon reasonable written notice from the department of

 

environmental quality, the foreclosing governmental unit shall

 

provide access to the department of environmental quality, its

 

employees, contractors, and any other person expressly authorized

 

by the department of environmental quality to conduct response

 

activities at the foreclosed property. Reasonable written notice

 

under this subdivision may include, but is not limited to, notice

 

by electronic mail or facsimile, if the foreclosing governmental

 

unit consents to notice by electronic mail or facsimile prior to

 

before the provision of notice by the department of environmental

 

quality.

 

     (b) If requested by the department of environmental quality to

 

protect public health, safety, and welfare or the environment, the

 

foreclosing governmental unit shall grant an easement for access to

 

conduct response activities on the foreclosed property as

 

authorized under chapter 7 of article II of the natural resources

 

and environmental protection act, 1994 PA 451, MCL 324.20101 to

 

324.20302.

 

     (c) If requested by the department of environmental quality to

 

protect public health, safety, and welfare or the environment, the

 

foreclosing governmental unit shall place and record deed


restrictions on the foreclosed property as authorized under chapter

 

7 of article II of the natural resources and environmental

 

protection act, 1994 PA 451, MCL 324.20101 to 324.20302.

 

     (d) The department of environmental quality may place an

 

environmental lien on the foreclosed property as authorized under

 

section 20138 of the natural resources and environmental protection

 

act, 1994 PA 451, MCL 324.20138.

 

     (14) If property foreclosed under section 78k and held by or

 

under the control of a foreclosing governmental unit is a facility

 

as defined under section 20101 of the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.20101, prior to

 

before the sale or transfer of the property under this section, the

 

department of environmental quality shall request and the

 

foreclosing governmental unit shall transfer the property to the

 

state land bank fast track authority created under section 15 of

 

the land bank fast track act, 2003 PA 258, MCL 124.765, if all of

 

the following apply:

 

     (a) The department of environmental quality determines that

 

conditions at a foreclosed property are an acute threat to the

 

public health, safety, and welfare, to the environment, or to other

 

property.

 

     (b) The department of environmental quality proposes to

 

undertake or is undertaking state-funded response activities at the

 

property.

 

     (c) The department of environmental quality determines that

 

the sale, retention, or transfer of the property other than under

 

this subsection would interfere with response activities by the


department of environmental quality.

 

     (15) A person convicted for executing a false affidavit under

 

subsection (5) shall be prohibited from bidding for a property or

 

purchasing a property at any sale under this section.

 

     (16) As used in this section:

 

     (a) "Minimum bid" is the minimum amount established by the

 

foreclosing governmental unit for which property may be sold under

 

this section. The minimum bid shall include all of the following:

 

     (i) All delinquent taxes, interest, penalties, and fees due on

 

the property. If a city, village, or township purchases the

 

property, the minimum bid shall not include any taxes levied by

 

that city, village, or township and any interest, penalties, or

 

fees due on those taxes.

 

     (ii) The expenses of administering the sale, including all

 

preparations for the sale. The foreclosing governmental unit shall

 

estimate the cost of preparing for and administering the annual

 

sale for purposes of prorating the cost for each property included

 

in the sale.

 

     (b) "Person" means an individual, partnership, corporation,

 

association, or other legal entity.

 

     Enacting section 1. This amendatory act takes effect 90 days

 

after the date it is enacted into law.

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