January 28, 2009, Introduced by Senators OLSHOVE and CLARKE and referred to the Committee on Banking and Financial Institutions.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending sections 78k and 78m (MCL 211.78k and 211.78m), section
78k as amended by 2006 PA 611 and section 78m as amended by 2006 PA
498.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 78k. (1) If a petition for foreclosure is filed under
section 78h, not later than the date of the hearing, the
foreclosing governmental unit shall file with the clerk of the
circuit court proof of service of the notice of the show cause
hearing under section 78j, proof of service of the notice of the
foreclosure hearing under this section, and proof of the personal
visit to the property and publication under section 78i.
(2) A person claiming an interest in a parcel of property set
forth in the petition for foreclosure may contest the validity or
correctness of the forfeited 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 property was exempt from the tax in question, or the
tax was not legally levied.
(d) The tax has been paid within the time limited by law for
payment or redemption.
(e) The tax was assessed fraudulently.
(f) The description of the property used in the assessment was
so indefinite or erroneous that the forfeiture was void.
(3) A person claiming an interest in a parcel of property set
forth in the petition for foreclosure who desires to contest that
petition shall file written objections with the clerk of the
circuit court and serve those objections on the foreclosing
governmental unit prior to the date of the hearing required under
this section.
(4) If the court determines that the owner of property subject
to foreclosure is a minor heir, is incompetent, is without means of
support, or is undergoing a substantial financial hardship, the
court
may withhold that property from foreclosure for 1 year 2
years or may enter an order extending the redemption period as the
court determines to be equitable. If the court withholds property
from foreclosure under this subsection, a taxing unit's lien for
taxes due is not prejudiced and that property shall be included in
the
immediately second succeeding year's tax foreclosure
proceeding.
(5) The circuit court shall enter final judgment on a petition
for foreclosure filed under section 78h at any time after the
hearing under this section but not later than the March 30
immediately succeeding the hearing with the judgment effective on
the March 31 immediately succeeding the hearing for uncontested
cases or 10 days after the conclusion of the hearing for contested
cases. All redemption rights to the property expire on the March 31
immediately succeeding the entry of a judgment foreclosing the
property under this section, or in a contested case 21 days after
the entry of a judgment foreclosing the property under this
section. However, if a court has entered an order staying an action
to foreclose a mortgage or land contract on the property under
section 3116 of the revised judicature act of 1961, 1961 PA 236,
MCL 600.3116, the circuit court shall stay entry of final judgment
on a petition for foreclosure or, if the judgment has been entered,
extending the period for redemption for 2 years or until the order
staying the action to foreclose a mortgage or land contract on the
property under section 3116 of the revised judicature act of 1961,
1961 PA 236, MCL 600.3116, is lifted, whichever occurs first. The
circuit court's judgment shall specify all of the following:
(a) The legal description and, if known, the street address of
the property foreclosed and the forfeited unpaid delinquent taxes,
interest, penalties, and fees due on each parcel of property.
(b) That fee simple title to property foreclosed by the
judgment will vest absolutely in the foreclosing governmental unit,
except as otherwise provided in subdivisions (c) and (e), without
any further rights of redemption, if all forfeited delinquent
taxes, interest, penalties, and fees are not paid on or before the
March 31 immediately succeeding the entry of a judgment foreclosing
the property under this section, or in a contested case within 21
days of the entry of a judgment foreclosing the property under this
section.
(c) That all liens against the property, including any lien
for unpaid taxes or special assessments, except future installments
of special assessments and liens recorded by this state or the
foreclosing governmental unit pursuant to the natural resources and
environmental protection act, 1994 PA 451, MCL 324.101 to
324.90106, are extinguished, if all forfeited delinquent taxes,
interest, penalties, and fees are not paid on or before the March
31 immediately succeeding the entry of a judgment foreclosing the
property under this section, or in a contested case within 21 days
of the entry of a judgment foreclosing the property under this
section.
(d) That, except as otherwise provided in subdivisions (c) and
(e), the foreclosing governmental unit has good and marketable fee
simple title to the property, if all forfeited delinquent taxes,
interest, penalties, and fees are not paid on or before the March
31 immediately succeeding the entry of a judgment foreclosing the
property under this section, or in a contested case within 21 days
of the entry of a judgment foreclosing the property under this
section.
(e) That all existing recorded and unrecorded interests in
that property are extinguished, except a visible or recorded
easement or right-of-way, private deed restrictions, interests of a
lessee or an assignee of an interest of a lessee under a recorded
oil or gas lease, interests in oil or gas in that property that are
owned by a person other than the owner of the surface that have
been preserved as provided in section 1(3) of 1963 PA 42, MCL
554.291, or restrictions or other governmental interests imposed
pursuant to the natural resources and environmental protection act,
1994 PA 451, MCL 324.101 to 324.90106, if all forfeited delinquent
taxes, interest, penalties, and fees are not paid on or before the
March 31 immediately succeeding the entry of a judgment foreclosing
the property under this section, or in a contested case within 21
days of the entry of a judgment foreclosing the property under this
section.
(f) A finding that all persons entitled to notice and an
opportunity to be heard have been provided that notice and
opportunity. A person shall be deemed to have been provided notice
and an opportunity to be heard if the foreclosing governmental unit
followed the procedures for provision of notice by mail, for visits
to forfeited property, and for publication under section 78i, or if
1 or more of the following apply:
(i) The person had constructive notice of the hearing under
this section by acquiring an interest in the property after the
date the notice of forfeiture is recorded under section 78g.
(ii) The person appeared at the hearing under this section or
filed written objections with the clerk of the circuit court under
subsection (3) prior to the hearing.
(iii) Prior to the hearing under this section, the person had
actual notice of the hearing.
(g) A judgment entered under this section is a final order
with respect to the property affected by the judgment and except as
provided in subsection (7) shall not be modified, stayed, or held
invalid after the March 31 immediately succeeding the entry of a
judgment foreclosing the property under this section, or for
contested cases 21 days after the entry of a judgment foreclosing
the property under this section.
(6) Except as otherwise provided in subsection (5)(c) and (e),
fee simple title to property set forth in a petition for
foreclosure filed under section 78h on which forfeited delinquent
taxes, interest, penalties, and fees are not paid on or before the
March 31 immediately succeeding the entry of a judgment foreclosing
the property under this section, or in a contested case within 21
days of the entry of a judgment foreclosing the property under this
section, shall vest absolutely in the foreclosing governmental
unit, and the foreclosing governmental unit shall have absolute
title to the property, including all interests in oil or gas in
that property except the interests of a lessee or an assignee of an
interest of a lessee under an oil or gas lease in effect as to that
property or any part of that property if the lease was recorded in
the office of the register of deeds in the county in which the
property is located before the date of filing the petition for
foreclosure under section 78h, and interests preserved as provided
in section 1(3) of 1963 PA 42, MCL 554.291. The foreclosing
governmental unit's title is not subject to any recorded or
unrecorded lien and shall not be stayed or held invalid except as
provided in subsection (5), (7), or (9).
(7) The foreclosing governmental unit or a person claiming to
have a property interest under section 78i in property foreclosed
under this section may appeal the circuit court's order or the
circuit court's judgment foreclosing property to the court of
appeals. An appeal under this subsection is limited to the record
of the proceedings in the circuit court under this section and
shall not be de novo. The circuit court's judgment foreclosing
property shall be stayed until the court of appeals has reversed,
modified, or affirmed that judgment. If an appeal under this
subsection stays the circuit court's judgment foreclosing property,
the circuit court's judgment is stayed only as to the property that
is the subject of that appeal and the circuit court's judgment
foreclosing other property that is not the subject of that appeal
is not stayed. To appeal the circuit court's judgment foreclosing
property, a person appealing the judgment shall pay to the county
treasurer the amount determined to be due to the county treasurer
under the judgment on or before the March 31 immediately succeeding
the entry of a judgment foreclosing the property under this
section, or in a contested case within 21 days of the entry of a
judgment foreclosing the property under this section, together with
a notice of appeal. If the circuit court's judgment foreclosing the
property is affirmed on appeal, the amount determined to be due
shall be refunded to the person who appealed the judgment. If the
circuit court's judgment foreclosing the property is reversed or
modified on appeal, the county treasurer shall refund the amount
determined to be due to the person who appealed the judgment, if
any, and retain the balance in accordance with the order of the
court of appeals.
(8) The foreclosing governmental unit shall record a notice of
judgment for each parcel of foreclosed property in the office of
the register of deeds for the county in which the foreclosed
property is located in a form prescribed by the department of
treasury.
(9) After the entry of a judgment foreclosing the property
under this section, if the property has not been transferred under
section 78m to a person other than the foreclosing governmental
unit, a foreclosing governmental unit may cancel the foreclosure by
recording with the register of deeds for the county in which the
property is located a certificate of error in a form prescribed by
the department of treasury, if the foreclosing governmental unit
discovers any of the following:
(a) The foreclosed property was not subject to taxation on the
date of the assessment of the unpaid taxes for which the property
was foreclosed.
(b) The description of the property used in the assessment of
the unpaid taxes for which the property was foreclosed was so
indefinite or erroneous that the forfeiture of the property was
void.
(c) The taxes for which the property was foreclosed had been
paid to the proper officer within the time provided under this act
for the payment of the taxes or the redemption of the property.
(d) A certificate, including a certificate issued under
section 135, or other written verification authorized by law was
issued by the proper officer within the time provided under this
act for the payment of the taxes for which the property was
foreclosed or for the redemption of the property.
(e) An owner of an interest in the property entitled to notice
under section 78i was not provided notice sufficient to satisfy the
minimum requirements of due process required under the state
constitution of 1963 and the constitution of the United States.
(f) A judgment of foreclosure was entered under this section
in violation of an order issued by a United States bankruptcy
court.
(10) A certificate of error submitted to the county register
of deeds for recording under subsection (9) need not be notarized
and may be authenticated by a digital signature of the foreclosing
governmental unit or by other electronic means.
Sec.
78m. (1) Not Subject to
subsection (16), 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 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. 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 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 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, 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.
(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.
(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) 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.
(16) If a court has entered an order staying an action to
foreclose a mortgage or land contract on the property under section
3116 of the revised judicature act of 1961, 1961 PA 236, MCL
600.3116, the circuit court shall enter an order staying the sale
of the property for 2 years or until the order staying the action
to foreclose a mortgage or land contract on the property under
section 3116 of the revised judicature act of 1961, 1961 PA 236,
MCL 600.3116, is lifted, whichever occurs first.
Enacting section 1. This amendatory act does not take effect
unless Senate Bill No. 29
of the 95th Legislature is enacted into law.