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.