Bill Summary – FastDemocracy

66th Legislature                                                                                             SB0253.01
                                              SENATE BILL NO. 253
                                           INTRODUCED BY C. SMITH
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 A BILL FOR AN ACT ENTITLED: "AN ACT GENERALLY REVISING TAX LIEN AND TAX DEED LAWS;
 PROVIDING THAT A TAX LIEN MAY ONLY BE ATTACHED IF DELINQUENT TAXES EXCEED $1,000;
 REMOVING THE REQUIREMENT THAT CURRENT TAXES BE PAID BEFORE DELINQUENT TAXES;
 PROVIDING THAT A TAX LIEN BE ASSIGNED AT AUCTION TO THE PERSON WHO REQUESTS THE
 LOWEST INTEREST RATE; REQUIRING THE ASSIGNEE TO APPLY TO THE COUNTY TREASURER FOR
 A TAX DEED; PROVIDING THAT UPON APPLICATION OF A TAX DEED, THE TAX DEED BE AUCTIONED
 TO THE HIGHEST BIDDER; PROVIDING A REQUIRED OPENING BID AT TAX DEED AUCTION THAT
 INCLUDES HALF THE ASSESSED VALUE IF THE PROPERTY INCLUDES A HABITABLE DWELLING OR
 COMMERCIAL STRUCTURE; PROVIDING THAT THE TRUE PROPERTY OWNER AND LIENHOLDERS OF
 A TAX DEED AUCTIONED PROPERTY CAN REQUEST FUNDS IN EXCESS OF THE DIFFERENCE
 BETWEEN THE SALE PRICE AND THE OPENING BID; AMENDING SECTIONS 15-16-102, 15-17-121,
 15-17-122, 15-17-125, 15-17-323, 15-17-326, 15-18-112, 15-18-211, 15-18-212, 15-18-213, 15-18-214,
 15-18-215, 15-18-411, 15-18-412, 15-18-413, AND 70-9-803, MCA; REPEALING SECTIONS 15-18-216 AND
 15-18-217, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE."
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 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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         NEW SECTION. Section 1. Sale at public auction -- notice of auction. (1) Upon receipt of an
 application for a tax deed pursuant to 15-18-211, the county treasurer shall hold a public auction in the county
 in which the property is located within 60 days of receipt of the application. The county treasurer shall publish
 notice of the auction as provided in 7-1-2121 that includes the date, time, and location of the auction. The auction
 must be held during the regular office hours of the county treasurer.
         (2) (a) The opening bid on the property must be the amount required in subsection (2)(b) or (2)(c), as
 applicable, and the county treasurer may not accept a bid below the opening bid.
         (b) The opening bid for a property on which there is no habitable dwelling or commercial structure is
 equal to:
         (i) the amount required to redeem the tax lien, which includes delinquent taxes, penalties, and the
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 interest rate applied pursuant to 15-17-323; and
         (ii) amounts paid by the applicant upon application for the tax deed pursuant to 15-18-211(2)(a) and the
 costs required as provided in 15-18-211(2)(b) to bring the property to sale.
         (c) The opening bid for a property on which there is a habitable dwelling or commercial structure is equal
 to the amounts provided for in subsections (2)(b)(i) and (2)(b)(ii) plus an amount equal to half of the most recent
 assessed value of the dwelling or structure.
         (3) (a) The county treasurer shall sell the property to the high bidder for the purchase price bid. Except
 as provided in subsection (3)(b), the high bidder shall post with the county treasurer a nonrefundable deposit of
 5% of the bid or $200, whichever is greater, at the time of sale. The deposit is applied to the sale price at the time
 of full payment. Notice of the deposit requirement must be posted at the auction site, and the county treasurer
 may require bidders to show their ability to post the deposit. The county treasurer may refuse to recognize the
 bid of a person who has previously bid and refused, for any reason, to honor the bid.
         (b) If the tax deed applicant is the high bidder, the tax deed applicant shall pay to the county treasurer
 any amounts included in the opening bid and not already paid, including recording fees, tax deed fees, and, if the
 property includes a dwelling or structure, one-half of the most recent assessed value of the improvement. The
 amounts paid with the tax deed application and for the costs of bringing the property to sale must be subtracted
 from the deposit required in subsection (3)(a).
         (c) If full payment of the purchase price and recording fees is not made within 24 hours of the sale,
 excluding weekends and legal holidays, the county treasurer shall cancel all bids, readvertise the auction as
 provided in subsection (5), and pay costs of the resale from the deposit. Any funds remaining from the deposit
 must be applied to the opening bid.
         (d) The portion of the opening bid that is equal to half of the most recent assessed value of the dwelling
 or structure is considered surplus funds and, upon sale of the property, must be distributed as provided in [section
 2(3)]. If the purchase price is higher than the opening bid, the difference between the purchase price and the
 opening bid is considered surplus funds and must be distributed as provided in [section 2(3)].
         (4) Upon full payment of the purchase price, the county treasurer shall issue the tax deed in the form
 provided in 15-18-213 and distribute the funds as provided in [section 2].
         (5) If the sale is canceled for any reason or if the buyer fails to make full payment within the time
 required, the county treasurer shall readvertise the sale within 30 days after the buyer's nonpayment or, if
 canceled, within 30 days of receipt of the costs of resale from the tax deed applicant. The sale must be held within
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 30 days of readvertising. The opening bid provided for in subsection (2) must be increased by the cost of
 advertising, additional county treasurer's fees, and interest at a rate of 1.5% per month.
           (6) On property for which there are no bidders at the public auction and for which the tax deed applicant
 fails to timely pay costs of resale or fails to pay the amounts due for issuance of a tax deed within 30 days after
 the sale pursuant to 15-18-211(2), the county treasurer shall enter the land on a list of property available for taxes
 and shall immediately notify the county commission that the property is available. During the first 90 days after
 the property is placed on the list, the county may purchase the property for the opening bid or may waive its rights
 to purchase the property. If the county waives its right to purchase the property or after the 90 days have passed,
 any person, the county, or any other governmental unit may purchase the property from the county treasurer,
 without further notice or advertising, for the opening bid. Interest on the opening bid continues to accrue through
 the month of sale.
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           NEW SECTION. Section 2. Distribution of tax deed auction proceeds. (1) The county treasurer shall
 distribute the proceeds of a tax deed auction or a property purchased pursuant to [section 1(6)] as provided in
 this section.
           (2) If the tax deed is purchased by a person other than the person who applied for the tax deed, the
 county treasurer shall pay to the applicant for the tax deed:
           (a) the amount paid for the assignment of the tax deed, including delinquent taxes, penalties, interest,
 and costs; and
           (b) all amounts paid pursuant to 15-18-211(2) plus interest at the rate of 1.5% per month for the period
 from the month after the date of the application for the tax deed through the month of the sale.
           (3) The surplus funds provided for in [section 1(3)(d)] must be retained by the county treasurer for the
 benefit of and distribution to those notified pursuant to 15-18-212(1). The county treasurer shall mail notices to
 the persons notified pursuant to 15-18-212(1) notifying them of the funds held for their benefit.
           (4) (a) The notices must be in substantially the following form:
                     NOTICE OF SURPLUS FUNDS FROM TAX DEED SALE
 COUNTY TREASURER
 ............. COUNTY, MONTANA
 Tax Deed #...................
 Tax Lien Number #............
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 Property Description: .................................................................................................................................
             Pursuant to [section 1], Montana Code Annotated, the above property was sold at public auction on
 ....................(date of sale), and a surplus of $...............(subject to change) will be held by this office for 120 days
 beginning on the date of this notice to benefit the persons having an interest in this property as described in
 15-18-212, MCA, as their interests may appear.
             To the extent possible, these funds will be used to satisfy in full each claimant with a senior mortgage
 or lien in the property before distribution of any funds to any junior mortgage or lien claimant or to the former
 property owner. To be considered for funds when they are distributed, you must file a notarized statement of claim
 with this office within 120 days of this notice. If you are a lienholder, your claim must include the particulars of your
 lien and the amounts currently due. Any lienholder claim that is not filed within the 120-day deadline is barred.
             A copy of this notice must be attached to your statement of claim. After the office examines the filed claim
 statements, it will notify you if you are entitled to any payment.
             Dated:..........................
             County Treasurer ..........................
             (b) The mailed notice must include a form for making a claim as provided in subsection (5). Service
 charges and the costs of the mailing must be paid out of the surplus funds held by the county treasurer. If the
 county treasurer certifies that the surplus funds are not sufficient to cover the service charges and mailing costs,
 the county treasurer shall receive the total amount of the surplus funds as a service charge.
             (5) A person receiving the notice provided for in subsection (4) has 120 days from the date of the notice
 to file a written claim with the county treasurer for the surplus funds. A claim in substantially the following form
 is deemed sufficient:
             CLAIM TO RECEIVE SURPLUS PROCEEDS OF A TAX DEED SALE
 Complete and return to:
 By mail:.............................................
 By e-mail:...........................................
 Note: The County Treasurer must pay all valid liens before distributing surplus funds to a titleholder.
 Claimant's name:.......................................
 Contact name, if applicable:...........................
 Address:...............................................
 Telephone number:................E-mail address:.................
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 Tax No:................................................
 Date of sale...........................................
 Check one:
 .....I am not making a claim and waive any claim I might have to the surplus funds on this tax deed sale.
 .....I claim surplus proceeds resulting from the above tax deed sale.
 I am a (check one) Lienholder...... Titleholder.......
 LIENHOLDER INFORMATION (Complete if claim is based on a lien against the sold property).
 Type of Lien: Mortgage.....Court Judgment.....Other.....
 Describe in detail:..............................................
 .................................................................
 ..................................................................................................................................
 If your lien is recorded in the county's official records, list the following, if known:
 Recording date:.............
 Instrument #:...............
 Book #:.....................
 Page #:.....................
 Original amount of lien: $..............
 Amounts due: $..........................
 Principal remaining due: $..............
 Interest due: $.........................
 Fees and costs due, including late fees: $(describe costs in detail, include additional sheet if needed).....................
 Attorney fees: $ (provide amount claimed): $.................... TITLEHOLDER INFORMATION (Complete if claim is
 based on title formerly held on sold property.)
 Nature of title (check one): Deed....Court Judgment....Other.... (describe in detail)............................................
 If your former title is recorded in the county's official records, list the following, if known:
 Recording date:.........................
 Instrument #:...........................
 Book #:.................................
 Page #:.................................
 Amount of surplus tax deed sale proceeds claimed: $.............
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 I hereby swear or affirm that all of the above information is true and correct.
 Date:..................................
 Signature:.............................
 STATE OF MONTANA
 .................. COUNTY
 Sworn to or affirmed and signed before me on.............(date) by.....................................(name of affiant).
 NOTARY PUBLIC
 Print, Type, or Stamp Commissioned Name of Notary)
 Personally Known,............or Produced Identification:.......
 Identification Produced:..................................
            (6) A claim may be:
            (a) mailed using the United States postal service. The filing date is the postmark on the mailed claim.
            (b) delivered using either a commercial delivery service or in person. The filing date is the day of delivery.
            (c) sent by fax or e-mail, as authorized by the county treasurer. The filing date is the date the county
 treasurer receives the fax or e-mail.
            (7) Except for claims by a property owner, claims that are not filed on or before close of business on the
 120th day after the date of the mailed notice as required by subsection (5) are barred. A person, other than the
 property owner, who fails to file a proper and timely claim is barred from receiving any disbursement of the
 surplus funds. The failure of any person described in 15-18-212, other than the property owner, to file a claim for
 surplus funds within the 120 days constitutes a waiver of interest in the surplus funds, and all claims are forever
 barred.
            (8) Within 90 days after the claim period expires, the county treasurer may either file an interpleader
 action in district court, if potentially conflicting claims to the funds exist, or pay the surplus funds according to the
 county treasurer's determination of the priority of claims using the information provided by the claimants. Fees
 and costs incurred by the county treasurer in determining whether an interpleader action should be filed must be
 paid from the surplus funds. If the county treasurer files an interpleader action, the court shall determine the
 distribution of funds based upon the priority of liens filed. The county treasurer may move the court to award
 reasonable fees and costs from the interpleaded funds. An action to require payment of surplus funds is not ripe
 until the claim and review periods expire. The failure of a person described in 15-18-212, other than the property
 owner, to file a claim for surplus funds within the 120 days constitutes a waiver of all interest in the surplus funds,
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 and all claims for them are forever barred.
         (9) A holder of a recorded governmental lien, other than a federal government lien, shall file a request
 for disbursement of surplus funds within 120 days after the mailing of the notice of surplus funds. The county
 treasurer shall distribute payments to each governmental unit to pay any lien of record held by a governmental
 unit against the property, including any tax lien not incorporated in the tax deed application and any delinquent
 taxes, before disbursing the surplus funds to nongovernmental claimants.
         (10) The tax deed recipient may directly pay off all liens to governmental units that could otherwise have
 been requested from surplus funds, and, upon filing a timely claim under subsection (5) with proof of payment,
 the tax deed recipient may receive the same amount of funds from the surplus funds for all amounts paid to each
 governmental unit in the same priority as the original lienholder.
         (11) If the county treasurer does not receive claims for surplus funds within the 120-day claim period, as
 required in subsection (7), there is a conclusive presumption that the legal titleholder of record described is
 entitled to the surplus funds. The county treasurer shall pr