Act No. 134

Public Acts of 1999

Approved by the Governor

July 22, 1999

Filed with the Secretary of State

July 23, 1999

EFFECTIVE DATE: July 23, 1999

STATE OF MICHIGAN

90TH LEGISLATURE

REGULAR SESSION OF 1999

Introduced by Senators Schuette, Johnson, Gougeon, Schwarz, McManus and Bennett

ENROLLED SENATE BILL No. 507

AN ACT to allow local units of government to obtain clear title to property previously acquired through the tax reversion process; to provide due process to those persons with a prior recorded interest in that property; to allow local units of government to reduce the backlog of tax reverted property; and to facilitate the return of tax reverted property to productive use.

The People of the State of Michigan enact:

Sec. 1. This act shall be known and may be cited as the "tax reverted property emergency disposal act".

Sec. 2. As used in this act:

(a) "Declaration of emergency backlog" means the declaration made pursuant to section 3.

(b) "General property tax act" means the general property tax act, 1893 PA 206, MCL 211.1 to 211.157.

(c) "Local unit of government" means a city, village, or township.

(d) "Qualified voter file" means the qualified voter file established under section 509o of the Michigan election law, 1954 PA 116, MCL 168.509o.

(e) "Tax reverted property" means property the title to which has vested in a local unit of government pursuant to the general property tax act as a result of the nonpayment of delinquent taxes and nonredemption within the statutory period provided under the general property tax act.

Sec. 3. (1) A local unit of government may obtain clear title to tax reverted property, the title to which vested in the local unit of government prior to January 1, 2000, if a declaration of emergency backlog is made as provided in this section.

(2) A local unit of government may make a declaration that an emergency backlog of tax reverted property exists within a portion of that local unit of government if the legislative body of the local unit of government approves a resolution at a meeting held pursuant to the open meetings act, 1976 PA 267, MCL 15.261 to 15.275, that states that the existing inventory of tax reverted property within all or a portion of the local unit of government is too large and is of uncertain title, that the tax reverted property is impairing the local unit of government's ability to market the tax reverted property by conventional means, and that the tax reverted property is contributing to the spread of neighborhood blight and deterioration.

Sec. 4. (1) If a declaration of emergency backlog is made as provided in section 3, the local unit of government shall conduct a title search to identify the owners of a recorded property interest in any specific parcel of tax reverted property located within the area identified in the resolution approved by the local unit of government under section 3. The foreclosing governmental unit may enter into a contract with 1 or more title insurance companies or agents licensed to conduct business in this state to perform the title search required under this subsection. If the post office address of a person with a recorded property interest in the tax reverted property cannot be determined from the title search under this subsection, the local unit of government shall review all of the following to ascertain that person's post office address:

(a) The records of the treasurer for the local unit of government.

(b) The records of the assessor for the local unit of government.

(c) The qualified voter file.

(2) After a title search is completed pursuant to subsection (1) and not less than 30 days before a quiet title action is commenced pursuant to section 5, the local unit of government shall send notice by certified mail return receipt requested to all persons with a recorded interest in any specific parcel of tax reverted property. The notice shall also be mailed to the property by first-class mail, addressed to "occupant". If the local unit of government is unable to ascertain the address of a person with a recorded property interest in the tax reverted property, or if notice by certified mail is refused, service of the notice shall be made by publication. The notice shall be published for 3 successive weeks, once each week, in a newspaper published and circulated in the county in which the tax reverted property is located, if there is one. If no paper is published in that county, publication shall be made in a newspaper published and circulated in an adjoining county, and proof of publication, by affidavit of the printer or publisher of the newspaper, shall be recorded with the register of deeds in the county in which the tax reverted property is located. This publication is service on the owners of a recorded property interest identified by the title insurance company licensed to do business in this state whose whereabouts cannot be reasonably ascertained or who refused service by certified mail.

(3) An authorized officer of the local unit of government shall file an affidavit attesting to his or her compliance with subsections (1) and (2) in the office of the register of deeds in the county in which the tax reverted property is located.

(4) The notice required under this section shall include all of the following:

(a) The date the property was deeded to the local unit of government.

(b) The date of the court hearing under section 5.

(c) A statement that a person notified may lose his or her interest in the property as a result of a circuit court judgment quieting title to the tax reverted property.

(d) A legal description or parcel number and the street address of the tax reverted property, if available.

(e) The person or persons to whom the notice is addressed.

(f) The total of taxes, interest, penalties, and fees due as of the expiration of the redemption period under section 131e of the general property tax act, MCL 211.131e.

(g) A statement that unless all taxes, interest, fees, and penalties are paid before a judgment quieting title is entered under section 5, absolute title to the tax reverted property shall vest in the local unit of government without any further redemption rights.

(5) After the local unit of government makes a declaration that an emergency backlog of tax reverted property exists under section 3, rights of redemption to tax reverted property, if any, are not transferable and a subsequent transferee is not entitled to notice under this section and has no rights of redemption under this act.

Sec. 5. (1) After notice is provided to all persons with a recorded interest in each parcel of tax reverted property as provided in section 4, the local unit of government may bring a quiet title action in the circuit court for the county in which the tax reverted property is located. A quiet title action under this section shall determine title for all parcels of tax reverted property set forth on a separate attachment to the complaint and incorporated into the complaint by reference.

(2) If a local unit of government brings a quiet title action pursuant to subsection (1), a person claiming a recorded interest in the tax reverted property may contest the validity or correctness of the unpaid delinquent taxes, interest, penalties, and fees for 1 or more of the following reasons:

(a) No law authorizes the tax.

(b) The person appointed to decide whether a tax shall be levied under a law of this state acted without jurisdiction, or did not impose the tax in question.

(c) The person or property assessed was exempt from the tax in question, or was not legally assessed.

(d) The tax has been paid.

(e) The tax was assessed fraudulently.

(3) The owner of a recorded interest in the tax reverted property who desires to contest the quiet title action shall file written objections with the clerk of the circuit court and serve those objections on the local unit of government.

(4) If the court determines that the owner of the tax reverted property is incompetent or is without means of support, the court may withhold that tax reverted property from the judgment quieting title or may enter an order extending the redemption period as the court determines to be equitable.

(5) If the circuit court enters a judgment in favor of the local unit of government, the circuit court shall quiet title to the tax reverted property in the local unit of government. The circuit court's judgment shall specify all of the following:

(a) The legal description and, if known, the street address of the tax reverted property and the unpaid delinquent taxes, interest, penalties, and fees due on each parcel of tax reverted property.

(b) That fee simple title to the tax reverted property is vested absolutely in the local unit of government, without any further rights of redemption.

(c) That all liens against the tax reverted property of any kind are extinguished, except a visible or recorded easement or right-of-way.

(d) That the local unit of government has good and marketable fee simple title to the tax reverted property.

(e) That any rights or interest claimed by any person to the tax reverted property are extinguished.

(6) Fee simple title to tax reverted property on which delinquent taxes, interest, penalties, and fees are not paid prior to the entry of judgment shall vest absolutely in the local unit of government upon entry of judgment and the local unit of government shall have absolute title to the property. The local unit of government's title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in subsection (7).

(7) The local unit of government or a person claiming an interest in the tax reverted property may appeal the circuit court's judgment to the court of appeals. The circuit court's judgment shall be stayed until the court of appeals has reversed, modified, or affirmed that judgment. To appeal the circuit court's judgment, a person shall pay the amount determined to be due to the local unit of government under the judgment within 21 days after the circuit court's judgment is entered, together with a notice of appeal. If the circuit court's judgment is affirmed on appeal, the amount determined to be due shall be refunded to the person who appealed the circuit court's judgment. If the circuit court's judgment is reversed or modified on appeal, the local unit of government shall refund the amount determined to be due to the person who appealed the judgment, if any, in accordance with the order of the court of appeals.

Sec. 6. Pursuant to section 131f of the general property tax act, MCL 211.131f, if the title search under section 3 identifies any person that has a recorded interest in tax reverted property who was not provided notice of tax foreclosure proceedings under the general property tax act for that tax reverted property, that person shall not have any rights of redemption provided under the general property tax act and shall only have the rights of redemption provided under this act.

Enacting section 1. This act does not take effect unless House Bill No. 4489 of the 90th Legislature is enacted into law.

This act is ordered to take immediate effect.

Secretary of the Senate.

Clerk of the House of Representatives.

Approved

Governor.