Bill Text: MI HB5724 | 2009-2010 | 95th Legislature | Engrossed

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Bill Title: Property tax; delinquent taxes; requirements for purchasing property at auction; revise. Amends sec. 78m of 1893 PA 206 (MCL 211.78m).

Spectrum: Partisan Bill (Democrat 15-0)

Status: (Introduced - Dead) 2010-12-03 - Referred To Committee Of The Whole [HB5724 Detail]

Download: Michigan-2009-HB5724-Engrossed.html

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HB-5724, As Passed House, May 18, 2010

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 5724

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1893 PA 206, entitled

 

"The general property tax act,"

 

by amending section 78m (MCL 211.78m), as amended by 2006 PA 498.

 

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 a sale held under

 

subsection (2).

 

House Bill No. 5724 (H-3) as amended May 18, 2010

     (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 at least 2 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 the sales shall be

 

published not less than 30 days before each 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 subsection (5), property shall be sold to the

 

person bidding the highest amount above the minimum bid. Beginning

 

January 1, 2011, except as otherwise provided in this subsection, a

 

foreclosing governmental unit may require that before a person is

 

eligible to bid on property under this section, that person shall

 

submit an affidavit, attesting that the person, or any entity

 

controlled by or associated with that person, [unless that person owns 5%

 or less of that entity,] does not owe any

delinquent taxes on any property located in this state. If a local

 

tax collecting unit requires an affidavit for eligibility to bid on

 

property under this section, an affidavit shall be required of all

 

persons bidding on property under this section unless that property

 

is that person's principal residence. If the foreclosing

 

governmental unit requires an affidavit, the affidavit shall be

 

recorded with the register of deeds for the county in which the

 

property is located. The foreclosing governmental unit shall not

 

require an affidavit if the property subject to the bid is the

 

principal residence of the person bidding on that property. If it

 

is determined that a person who has submitted an affidavit owes

 

delinquent taxes on property in this state, the foreclosing

 

governmental unit shall place a lis pendens on the property sold to

 

that person under this section pursuant to chapter 27 of the

 

revised judicature act of 1961, 1961 PA 236, MCL 600.2701 to

 

600.2735, and that person is guilty of perjury, a misdemeanor

 

punishable by imprisonment for not more than 1 year or by a fine of

 

not more than $5,000.00, or both. 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 may cancel the sale prior to the

 

issuance of a deed under this subsection if authorized under the

 

procedures. The foreclosing governmental unit may require full

 

payment by cash, certified check, or money order at the close of

 

each day's bidding. Not more than 30 60 days after the date of a

 

sale under this subsection, the foreclosing governmental unit shall

 

convey the property by deed to the person bidding the highest

 

amount above the minimum bid. 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.

 

If this state is the foreclosing governmental unit within a county,

 

the department of natural resources shall conduct the sale of

 

property under this subsection and subsections (4) and (5) on

 

behalf of this state.

 

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

 

of that sale, and prior to 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, or

 

township within 30 days.

 

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

 

offered for sale at not less than 2 sales conducted as required by

 

subsection (2). The final sale held under subsection (2) shall be

 

held not less than 28 days after the previous 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.

 

     (6) On or before December 1 immediately succeeding the date of

 

the sale under subsection (5), 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 date of the sale under subsection (5),

 

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 foreclosing governmental unit shall deposit the 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) As used in this section, "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:

 

     (a) 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.

 

     (b) 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.

 

     (12) 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.

 

     (13) 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 natural resources and

 

environment under this act or the land bank fast track act, 2003 PA

 

258, MCL 124.751 to 124.774.

 

     (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(1)(o) of the natural resources and

 

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

 

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 natural resources and environment, the

 

foreclosing governmental unit shall provide access to the

 

department of environmental quality natural resources and

 

environment, its employees, contractors, and any other person

 

expressly authorized by the department of environmental quality

 

natural resources and environment 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 the

 

provision of notice by the department of environmental quality

 

natural resources and environment.

 

     (b) If requested by the department of environmental quality

 

natural resources and environment 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 the

 

natural resources and environmental protection act, 1994 PA 451,

 

MCL 324.20101 to 324.20519.

 

     (c) If requested by the department of environmental quality

 

natural resources and environment 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 the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.20101 to

 

324.20519.

 

     (d) The department of environmental quality natural resources

 

and environment 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.

 

     (15) 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(1)(o) of the natural resources and

 

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

 

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

 

department of environmental quality natural resources and

 

environment 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 natural resources

 

and environment 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 natural resources

 

and environment proposes to undertake or is undertaking state-

 

funded response activities at the property.

 

     (c) The department of environmental quality natural resources

 

and environment 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

 

natural resources and environment.