HP0571, LD 764, item 1, An Act To Ensure That Municipalities Refund Amounts Collected in Excess of Tax Liens

An Act To Ensure That Municipalities Refund Amounts Collected in Excess of Tax Liens

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 36 MRSA §949 is enacted to read:

§ 949. Disbursement of excess funds

A municipality that obtains title to residential real estate under the operation of this article shall disburse to the former owner the excess of any funds as provided in this section.

1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

A. "Excess of any funds" means the amount obtained for the disposition of residential real estate less:

(1) All tax liens imposed on the residential real estate by the municipality, including interest;

(2) Fees for recordation and discharge of the lien, as established by Title 33, section 751, plus $13;

(3) The fee established in section 943 for sending a notice if the notice is actually sent, including certified mail, return receipt requested fees;

(4) Any court costs;

(5) All expenses incurred in disposing of the residential real estate; and

(6) Any property taxes that would have been assessed on the property while the property was held by the municipality within 180 days of foreclosure.

B. "Former owner" means a party named on a tax lien mortgage at the time of the levy of a tax lien or that party's successors, heirs or assigns.

2. Time and form of return; notice. Within 30 days of the disposition of residential real estate or 180 days of foreclosure, whichever is earlier, a municipality shall mail by certified mail, return receipt requested, to the former owner's last known address, notice of the excess of any funds. The notice must include an itemized statement showing the amount for which the real estate was sold and all deductions made from that amount. The notice also must include directions for the redemption of the excess of any funds, including the hours of operation of the clerk of the municipality.

3. Escrow; failure to redeem. A municipality shall hold the excess of any funds in escrow for 36 months for the benefit of the former owner. The municipality shall pay immediately the excess of any funds upon the personal appearance of the former owner or a legal representative of the former owner. If the former owner or a legal representative of the former owner fails to appear personally within 36 months of the date notice is provided under subsection 2, the excess of any funds must be paid to the Treasurer of State to be credited to the General Fund.

4. Failure to dispose of residential real estate. If a municipality does not dispose of residential real estate within 180 days of foreclosure, the excess of any funds is determined by subtracting from the fair market value of the real estate at the time of foreclosure, as determined by an independent appraisal, the costs specified in subsection 1, paragraph A and the cost of the appraisal performed pursuant to this subsection.

5. Unorganized territory. The obligations of a municipality under this section apply to the State with regard to property in the unorganized territory.

summary

Under current law, if a municipality forecloses on a parcel of real estate for failure to pay taxes owed on that real estate, the municipality is under no obligation to return any funds that exceed the amount owed in taxes after the sale of the property.

This bill requires a municipality that forecloses on residential real estate to return the excess funds, after subtracting the tax lien, interest, fees for recording the lien, costs of mailing notice, court costs, taxes that would have been assessed while the property was held by the municipality and any other expenses incurred in disposing of the real estate. Notice of the availability of the excess funds must be provided to the former owner within 30 days of sale of the real estate or 180 days of the foreclosure, whichever is sooner. If the former owner fails to claim the excess funds within 36 months after notice of the availability of excess funds, the municipality must remit the excess funds to the Treasurer of State for credit to the General Fund.

HP0571 LD 764	First Regular Session - 125th Maine Legislature		LR 423 Item 1
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