SENATE BILL NO. 1330 September 23, 1998, Introduced by Senators EMMONS and SCHUETTE and referred to the Committee on Economic Development, International Trade and Regulatory Affairs. A bill to allow for the identification of tax delinquent homestead property; to permit an accelerated quiet title process for tax delinquent homestead property; to require certain proce- dures of certain local units of government; to provide for the imposition of certain fees; and to provide for the disposition of certain tax delinquent homestead property. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 1. This act shall be known and may be cited as the 2 "Michigan tax delinquent homestead property identification and 3 accelerated quiet title act". 4 Sec. 2. As used in this act: 5 (a) "Collecting unit" means a city, township, or county that 6 collects delinquent taxes on tax delinquent homestead property 7 under this act. 06497'98 FDD 2 1 (b) "Delinquent taxes" means real property taxes that have 2 been returned as delinquent under the general property tax act. 3 Delinquent taxes include any interest, penalty, fee, or other 4 cost authorized under the general property tax act. 5 (c) "General property tax act" means the general property 6 tax act, 1893 PA 206, MCL 211.1 to 211.157. 7 (d) "Homestead" means property for which a homestead exemp- 8 tion is granted under section 7cc of the general property tax 9 act, MCL 211.7cc. 10 (e) "Lienholder" means a person who purchases a lien on tax 11 delinquent homestead property pursuant to this act. 12 (f) "Local tax collecting unit" means a city or township, or 13 a county if the county collects property taxes on behalf of a 14 city or township. 15 (g) "Local unit of government" means a city, village, or 16 township. 17 (h) "Occupant" means the person or persons residing in tax 18 delinquent homestead property. 19 (i) "Owner" means the person or persons who hold legal title 20 to tax delinquent homestead property. 21 (j) "Person" means an individual, partnership, corporation, 22 association, governmental entity, or other legal entity. 23 (k) "Tax delinquent homestead property" means a homestead on 24 which taxes have been returned as delinquent under the general 25 property tax act. 26 Sec. 3. (1) On or before March 1 in any tax year, a local 27 tax collecting unit may, by resolution approved at a meeting held 06497'98 3 1 pursuant to the open meetings act, 1976 PA 267, MCL 15.261 to 2 15.275, elect to collect delinquent taxes and to bring an accel- 3 erated quiet title action on tax delinquent homestead property 4 under this act. 5 (2) If a local tax collecting unit does not elect to utilize 6 this act pursuant to subsection (1), the county in which the 7 local tax collecting unit is located shall collect delinquent 8 taxes on tax delinquent homestead property under this act. 9 Sec. 4. (1) Delinquent taxes on tax delinquent homestead 10 property may be collected under this act and the tax delinquent 11 homestead property is subject to an accelerated quiet title 12 action under this act if a representative of the collecting unit 13 made a personal inspection of the tax delinquent homestead prop- 14 erty under the Michigan abandoned property identification and 15 accelerated foreclosure act, determined that the occupant of the 16 tax delinquent homestead property is the owner of the tax delin- 17 quent homestead property, and determined that the tax delinquent 18 homestead property is the owner's homestead. The collecting unit 19 shall determine if the occupant of the tax delinquent homestead 20 property is the owner of the tax delinquent homestead property 21 and if the tax delinquent homestead property is the owner's home- 22 stead by reviewing all of the following: 23 (a) A list of rental properties maintained by the local unit 24 of government in which the tax delinquent homestead property is 25 located. 26 (b) Assessing records of the local tax collecting unit. 06497'98 4 1 (c) Affidavits for homestead exemptions maintained by the 2 department of treasury pursuant to section 7cc of the general 3 property tax act, MCL 211.7cc. 4 (2) If delinquent taxes on tax delinquent homestead property 5 are not eligible to be collected under this act pursuant to 6 subsection (1), the delinquent taxes shall be collected under the 7 general property tax act. 8 Sec. 5. (1) The collecting unit shall provide written 9 notice to the owner of tax delinquent homestead property by cer- 10 tified mail, return receipt requested, of both of the following: 11 (a) That delinquent taxes levied on the tax delinquent home- 12 stead property are subject to collection under this act. 13 (b) Failure to pay the delinquent taxes within 1 year from 14 the immediately preceding March 1 may result in the sale of the 15 tax delinquent homestead property and an accelerated quiet title 16 action against the tax delinquent homestead property. 17 (2) If delinquent taxes levied on tax delinquent homestead 18 property are not paid within 6 months of the notice provided 19 under subsection (1), the collecting unit shall send a second 20 notice to the owner of the tax delinquent homestead property by 21 certified mail, return receipt requested, providing the same 22 information set forth in subsection (1). 23 (3) Thirty days prior to March 1, if delinquent taxes levied 24 on tax delinquent homestead property are not paid, the collecting 25 unit shall send a third notice to the owner of the tax delinquent 26 homestead property by certified mail, return receipt requested, 06497'98 5 1 advising the owner that the tax delinquent homestead property is 2 subject to sale under this act on March 1. 3 Sec. 6. (1) On March 1 in each tax year, the collecting 4 unit or a private vendor under contract with the collecting unit 5 shall submit for sale to the highest bidder liens on tax delin- 6 quent homestead property delinquent for taxes assessed in the 7 immediately preceding tax year and for which notice has been sent 8 to the owner of the tax delinquent homestead property as required 9 under section 5. 10 (2) The minimum acceptable bid for a lien on tax delinquent 11 homestead property is the amount of delinquent taxes due on that 12 tax delinquent homestead property. A person bidding for a lien 13 on tax delinquent homestead property may bid more than the amount 14 of delinquent taxes due on that tax delinquent homestead 15 property. If a lien on tax delinquent homestead property is sold 16 for more than the amount of delinquent taxes due, the amount 17 received greater than the amount of delinquent taxes due shall be 18 applied as follows: 19 (a) First, to cover the administrative costs of the sale. 20 (b) Any remaining balance shall be applied to other adminis- 21 trative costs of tax collection under this act. 22 (3) The highest bidder for a lien on tax delinquent home- 23 stead property shall receive a lien on that tax delinquent home- 24 stead property that conveys a 100% interest in that tax delin- 25 quent homestead property if not redeemed as provided in this 26 act. 06497'98 6 1 (4) If no minimum acceptable bid is offered for a lien on 2 tax delinquent homestead property, the lien for that tax 3 delinquent homestead property shall be considered bid off to the 4 collecting unit for the amount of delinquent taxes due on that 5 tax delinquent homestead property. 6 Sec. 7. After the sale provided for in section 6, the col- 7 lecting unit shall send a fourth notice to the owner of the tax 8 delinquent homestead property by certified mail, return receipt 9 requested, informing the owner that a lien on the tax delinquent 10 homestead property was either sold to a lienholder pursuant to 11 section 6(3) or was bid off to the collecting unit pursuant to 12 section 6(4), and that the tax delinquent homestead property is 13 subject to an accelerated quiet title action as provided in this 14 act if not redeemed. 15 Sec. 8. (1) Unless redeemed, 1 year after the notice pro- 16 vided for in section 7, the collecting unit shall issue a tax 17 deed to the lienholder or to the collecting unit if the lien on 18 that tax delinquent homestead property was bid off to the col- 19 lecting unit. 20 (2) A tax deed issued to a lienholder under subsection (1) 21 is valid for 1 year after it is issued. If the lien on the tax 22 delinquent homestead property is not redeemed as provided under 23 this act, the lienholder shall perfect title to the tax delin- 24 quent homestead property as provided under this act or surrender 25 the tax deed to the collecting unit without refund of the pur- 26 chase amount. 06497'98 7 1 (3) After the collecting unit issues a tax deed pursuant to 2 subsection (1), the lienholder or the collecting unit if the lien 3 on the tax delinquent homestead property was bid off to the col- 4 lecting unit shall perform a title search on the tax delinquent 5 homestead property. If the title search required under this sub- 6 section is performed by the lienholder, the lienholder shall pro- 7 vide the results of the title search to the collecting unit. 8 Sec. 9. (1) After the title search required under section 8 9 is performed, the collecting unit shall send a fifth notice by 10 certified mail, return receipt requested, to the owner and to all 11 persons with a legal interest in each parcel of tax delinquent 12 homestead property subject to the collection of delinquent taxes 13 under this act. If the collecting unit is unable to ascertain 14 the whereabouts or the post office address of the owner or any 15 person with a legal interest in the tax delinquent homestead 16 property subject to the collection of delinquent taxes under this 17 act, service of the notice shall be made by publication. The 18 notice shall be published for 4 successive weeks, once each week, 19 in a newspaper published and circulated in the county in which 20 the tax delinquent homestead property is located, if there is 21 one. If no newspaper is published in that county, publication 22 shall be made in a newspaper published and circulated in an 23 adjoining county. Proof of publication, by affidavit of the 24 printer or publisher of the newspaper, shall be filed with the 25 register of deeds in the county in which the tax delinquent home- 26 stead property is located. This publication shall be instead of 27 personal service on the owner or any person with a legal interest 06497'98 8 1 in the tax delinquent homestead property whose whereabouts cannot 2 be ascertained. 3 (2) The notice required under subsection (1) shall include, 4 but is not limited to, all of the following: 5 (a) A statement that a tax deed to the tax delinquent home- 6 stead property was issued to either the lienholder or the col- 7 lecting unit. 8 (b) A statement that the lienholder or the collecting unit 9 may bring an action in the circuit court in the county in which 10 the tax delinquent homestead property is located to quiet title 11 to that tax delinquent homestead property. 12 (c) Instructions for redemption, including a statement of 13 all delinquent taxes, costs, and fees due. 14 (d) If the lien on the tax delinquent homestead property was 15 bid off to the collecting unit, the time, date, and location of 16 the hearing required under section 11 at which the owner or a 17 person with a legal interest in the tax delinquent homestead 18 property may object to absolute title to the tax delinquent home- 19 stead property vesting in the local unit of government in which 20 the tax delinquent homestead property is located for any of the 21 reasons set forth in section 98 of the general property tax act, 22 MCL 211.98. 23 (3) The collecting unit may utilize the qualified voter file 24 established under section 509o of the Michigan election law, 1954 25 PA 116, MCL 168.509o, to confirm the address of the owner and any 26 person with a legal interest in each parcel of tax delinquent 06497'98 9 1 homestead property subject to the collection of delinquent taxes 2 under this act. 3 Sec. 10. (1) If a tax deed is issued to a lienholder pursu- 4 ant to section 8, 6 months after the fifth notice required under 5 section 9 is sent the lienholder may bring an action in the cir- 6 cuit court in the county in which the tax delinquent homestead 7 property is located to quiet title to that tax delinquent home- 8 stead property in the lienholder. 9 (2) If the tax delinquent homestead property is occupied by 10 the owner, not less than 60 days before the circuit court enters 11 an order quieting title to tax delinquent homestead property the 12 lienholder shall notify the family independence agency that an 13 action to quiet title to that tax delinquent homestead property 14 is pending. The family independence agency shall not take any 15 action to diminish the lienholder's interest in the tax delin- 16 quent homestead property, but the family independence agency may 17 assist the owner in redeeming the tax delinquent homestead 18 property. 19 (3) If a lienholder brings a quiet title action under sub- 20 section (1) and the circuit court enters a judgment vesting abso- 21 lute title to the tax delinquent homestead property in the lien- 22 holder, all prior interests in the tax delinquent homestead prop- 23 erty are terminated. 24 Sec. 11. (1) If a tax deed is issued to a collecting unit 25 pursuant to section 8, 90 days after the fifth notice required 26 under section 9 is sent the collecting unit may schedule a 27 hearing to show cause why absolute title to the tax delinquent 06497'98 10 1 homestead property should not vest in the local unit of 2 government in which the tax delinquent homestead property is 3 located. 4 (2) A hearing under subsection (1) may be conducted by an 5 existing department within the collecting unit, an entity created 6 by the collecting unit for that purpose, or a private vendor 7 under contract with the collecting unit or entity created by the 8 collecting unit. 9 (3) The owner or any person with a legal interest in the tax 10 delinquent homestead property may appear at the hearing held 11 under this section and redeem the tax delinquent homestead prop- 12 erty or show cause why title to the tax delinquent homestead 13 property should not vest in the local unit of government in which 14 the tax delinquent homestead property is located for any of the 15 reasons set forth in section 98 of the general property tax act, 16 MCL 211.98. 17 (4) Any determination made at the hearing conducted under 18 this section is prima facie evidence in a quiet title action 19 brought pursuant to section 12. 20 Sec. 12. (1) After the hearing required under section 11, a 21 collecting unit may bring a quiet title action in the circuit 22 court in the county in which the tax delinquent homestead prop- 23 erty is located. A quiet title action under this section shall 24 determine title for all parcels of tax delinquent homestead prop- 25 erty set forth on a separate attachment to the complaint and 26 incorporated into the complaint by reference. 06497'98 11 1 (2) If the tax delinquent homestead property is occupied by 2 the owner, not less than 60 days before the circuit court enters 3 an order quieting title to tax delinquent homestead property the 4 collecting unit shall notify the family independence agency that 5 an action to quiet title to that tax delinquent homestead prop- 6 erty is pending. The family independence agency shall not take 7 any action to diminish the collecting unit's interest in the tax 8 delinquent homestead property, but the family independence agency 9 may assist the owner in redeeming the tax delinquent homestead 10 property. 11 (3) If a collecting unit brings a quiet title action under 12 subsection (1) and the circuit court enters a judgment vesting 13 absolute title to the tax delinquent homestead property in the 14 local unit of government in which the tax delinquent homestead 15 property is located, all prior interests in the tax delinquent 16 homestead property are canceled. 17 Sec. 13. If a circuit court enters a judgment quieting 18 title to the tax delinquent homestead property in the local unit 19 of government in which the tax delinquent homestead property is 20 located pursuant to section 12, the local unit of government may 21 do 1 or more of the following with the tax delinquent homestead 22 property: 23 (a) Demolish any unsafe structure located on the tax delin- 24 quent homestead property. 25 (b) Remediate any environmental contamination found on the 26 tax delinquent homestead property or notify the department of 27 environmental quality or other appropriate organization regarding 06497'98 12 1 the existence of environmental contamination on the tax 2 delinquent homestead property. 3 (c) Sell the tax delinquent homestead property to a private 4 purchaser by auction or direct marketing. 5 (d) Transfer the tax delinquent homestead property to a 6 homestead program if a homestead program exists and the tax 7 delinquent homestead property meets the specifications of the 8 homestead program. 9 (e) Transfer the tax delinquent homestead property to a non- 10 profit organization for rehabilitation and reuse. 11 (f) Retain the tax delinquent homestead property for a spe- 12 cific public purpose, including, but not limited to, a park, zoo, 13 or university, or as part of an existing project with an antici- 14 pated completion date of not more than 2 years after the date 15 title to the tax delinquent homestead property vests in the local 16 unit of government. 06497'98 Final page. 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