Bill Text: MI SB0640 | 2013-2014 | 97th Legislature | Engrossed

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Bill Title: Property tax; delinquent taxes; procedure for land banks to purchase delinquent tax property; provide for. Amends sec. 78m of 1893 PA 206 (MCL 211.78m). TIE BAR WITH: SB 0295'13

Spectrum: Bipartisan Bill

Status: (Engrossed - Dead) 2014-12-11 - Referred To Committee On Detroit's Recovery And Michigan's Future [SB0640 Detail]

Download: Michigan-2013-SB0640-Engrossed.html

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SB-0640, As Passed Senate, December 11, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

SENATE BILL NO. 640

 

 

 

 

 

 

 

 

 

 

 

 

 

     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).

 

     (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 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 or a joint sale with 1 or more other foreclosing

 

governmental units. Notice of the time and location of the sales a

 

sale shall be published not less than 30 days before each a sale in

 

a newspaper published and circulated in the county in which the

 

property is located, if there is one and also may be published on

 

an internet website maintained by the foreclosing governmental

 

unit. If no newspaper is published in that county, publication

 

shall be made in a newspaper published and circulated in an

 

adjoining county and also may be published on an internet website

 

maintained by the foreclosing governmental unit. 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), When

 

property is offered for sale with a minimum bid established by the

 

foreclosing governmental unit, the property shall be sold to the

 

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

 

minimum bid, the highest amount bid 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 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, electronic transfer of

 

funds, or money order at the close of each day's bidding. Before

 

conveying a parcel sold at a sale, a foreclosing governmental unit

 

may require the purchaser to provide proof of payment to the tax

 

collecting unit of any property taxes owed on the parcel at the

 

time of the sale. A foreclosing governmental unit may cancel a sale

 

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

 

a sale are not paid within 30 days of the sale. Not more than 30

 

days after the date of a sale under this subsection, or 15 days

 

after provision of proof of payment to the tax collecting unit

 

under this section, whichever is later, 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 bid 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 or the sale is canceled under this

 

subsection. If this state is the foreclosing governmental unit

 

within a county, the department of natural resources treasury shall

 

conduct be responsible for conducting 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 1 or more sales conducted as

 

required by subsection (2). The 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 previous 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 preparation, sale, and conveyance

 

of the parcel or parcels.

 

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

 

the sale under subsection (5) 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 date of

 

the sale under subsection (5) 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 foreclosing governmental unit shall deposit the proceeds

 

from the sale of property under this section into a restricted

 

account established and maintained by the foreclosing governmental

 

unit and designated as the "delinquent tax property sales proceeds

 

for the year ______". The foreclosing governmental unit shall

 

direct the expenditure and investment of the account consistent

 

with the requirements applicable to a delinquent tax revolving fund

 

under section 87b. 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 foreclosed property, as

 

accounted for by the foreclosing governmental unit, whether or not

 

all of the property was sold.

 

     (b) All unpaid costs of incurred by the foreclosing

 

governmental unit for the sale, transfer, and conveyance of

 

foreclosed property for the year shall be paid by the foreclosing

 

governmental unit.

 

     (c) Any costs of incurred by the foreclosing governmental unit

 

for the foreclosure proceedings for the year, including, but not

 

limited to, costs of mailing, publication, personal service, and

 

outside contractors shall be paid by the foreclosing governmental

 

unit.

 

     (d) Any costs for the sale and transfer of foreclosed property

 

or for the foreclosure proceedings incurred by the foreclosing

 

governmental unit for any prior year that have not been paid or

 

reimbursed from that prior year's delinquent tax property sales

 

proceeds shall be paid by the foreclosing governmental unit.

 

     (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, but not limited to,

 

costs of any environmental remediation.

 

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

 

any of the following shall be paid by the foreclosing governmental

 

unit:

 

     (i) Any costs for the sale, transfer, conveyance, or

 

maintenance of property or for foreclosure proceedings incurred by

 

the foreclosing governmental unit for any subsequent year that are

 

not paid or reimbursed from that subsequent year's delinquent tax

 

property sales proceeds shall be paid by the foreclosing

 

governmental unit from any remaining balance in any prior year's

 

delinquent tax property sales proceeds account.

 

     (ii) Any costs incurred by the foreclosing governmental unit

 

for the defense of title actions.

 

     (iii) Any other costs incurred by the foreclosing governmental

 

unit 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 reported by

 

the foreclosing governmental unit, 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 foreclosing governmental unit after adoption of a

 

resolution 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 and the transfer or conveyance of

 

parcels. 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 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) 20101 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, 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

 

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 the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.20101 to

 

324.20519.324.20302.

 

     (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 the natural resources and environmental protection act, 1994

 

PA 451, MCL 324.20101 to 324.20519.324.20302.

 

     (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.

 

     (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) 20101 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 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.