SENATE BILL NO. 1368 November 12, 1998, Introduced by Senator SCHUETTE and referred to the Committee on Economic Development, International Trade and Regulatory Affairs. A bill to allow for the identification of tax delinquent residential rental property eligible for accelerated foreclosure; to permit the accelerated foreclosure of tax delinquent residen- tial rental property; to require certain procedures of certain state departments and certain local units of government; to pro- hibit certain civil and administrative actions; and to provide for the disposition of foreclosed tax delinquent residential rental 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 residential rental property identifica- 3 tion and accelerated foreclosure act". 4 Sec. 2. As used in this act: 5 (a) "Collecting unit" means a city, township, or county that 6 utilizes this act to collect delinquent taxes on, and to 06496'98 FDD 2 1 accelerate the foreclosure of, tax delinquent residential rental 2 property. 3 (b) "Delinquent taxes" means real property taxes that have 4 been returned as delinquent under the general property tax act. 5 Delinquent taxes include any interest, penalty, fee, or other 6 cost authorized under the general property tax act. 7 (c) "General property tax act" means the general property 8 tax act, 1893 PA 206, MCL 211.1 to 211.157. 9 (d) "Local tax collecting unit" means a city or township. 10 (e) "Local unit of government" means a city, village, or 11 township. 12 (f) "Occupant" means the person or persons residing in tax 13 delinquent residential rental property, whether under a lease, 14 land contract, or otherwise. 15 (g) "Owner" means the person or persons who hold legal title 16 to tax delinquent residential rental property. 17 (h) "Tax delinquent residential rental property" means prop- 18 erty occupied by a person or persons other than the owner of that 19 property pursuant to a lease or land contract and on which taxes 20 have been returned as delinquent under the general property tax 21 act. Tax delinquent residential rental property includes a 22 multi-unit residential structure of 6 units or less. 23 Sec. 3. (1) On or before March 1 in any tax year, a local 24 tax collecting unit may, by resolution approved at a meeting held 25 pursuant to the open meetings act, 1976 PA 267, MCL 15.261 to 26 15.275, elect to collect delinquent taxes on, and to accelerate 06496'98 3 1 the foreclosure of, tax delinquent residential rental property 2 under this act. 3 (2) If a local tax collecting unit does not elect to utilize 4 this act pursuant to subsection (1), the county in which the 5 local tax collecting unit is located shall collect delinquent 6 taxes on tax delinquent residential rental property under this 7 act. 8 Sec. 4. (1) Delinquent taxes on tax delinquent residential 9 rental property may be collected under this act and the tax 10 delinquent residential rental property is subject to accelerated 11 foreclosure under this act if all of the following procedures are 12 complied with: 13 (a) A representative of the collecting unit made a personal 14 inspection of the tax delinquent residential rental property 15 under the Michigan abandoned property identification and acceler- 16 ated foreclosure act and determined that the tax delinquent resi- 17 dential rental property is occupied by a person with a legal 18 interest in the tax delinquent residential rental property. 19 (b) The person occupying the tax delinquent residential 20 rental property is not the owner of the tax delinquent residen- 21 tial rental property. The collecting unit shall determine if the 22 person occupying the tax delinquent residential rental property 23 is the owner of the tax delinquent residential rental property by 24 reference to all of the following: 25 (i) A list of rental properties maintained by the local unit 26 of government in which the tax delinquent residential rental 27 property is located. 06496'98 4 1 (ii) Assessing records of the local tax collecting unit. 2 (iii) Affidavits for homestead exemptions maintained by the 3 department of treasury pursuant to section 7cc of the general 4 property tax act, MCL 211.7cc. 5 (2) If delinquent taxes on tax delinquent residential rental 6 property are not eligible to be collected under this act pursuant 7 to subsection (1), the delinquent taxes shall be collected under 8 the general property tax act. 9 Sec. 5. (1) The collecting unit shall provide written 10 notice to the occupant and to the owner of tax delinquent resi- 11 dential rental property that delinquent taxes levied on the tax 12 delinquent residential rental property are subject to collection 13 under this act, which, if not paid, may result in accelerated 14 foreclosure and eviction. 15 (2) If delinquent taxes levied on tax delinquent residential 16 rental property are not paid within 6 months of the notice pro- 17 vided under subsection (1), the collecting unit shall send a 18 second notice to the occupant and to the owner of the tax delin- 19 quent residential rental property providing the same information 20 set forth in subsection (1). 21 Sec. 6. (1) If delinquent taxes levied on tax delinquent 22 residential rental property are not paid within 6 months of the 23 notice provided under section 5(2), the collecting unit shall 24 conduct, or contract with a private vendor to conduct, a title 25 search for each parcel of tax delinquent residential rental prop- 26 erty subject to the collection of delinquent taxes and 27 accelerated foreclosure under this act. 06496'98 5 1 (2) The collecting unit or private vendor under contract 2 with the collecting unit may utilize the qualified voter file 3 established under section 509o of the Michigan election law, 1954 4 PA 116, MCL 168.509o, to confirm the address of the owner and any 5 person with a legal interest in each parcel of tax delinquent 6 residential rental property subject to the collection of delin- 7 quent taxes and accelerated foreclosure under this act. 8 Sec. 7. (1) After conducting the title search required 9 under section 6, the collecting unit, or a private vendor under 10 contract with the collecting unit, shall send notice by certified 11 mail, return receipt requested, to the occupant, the owner, and 12 all persons with a legal interest in each parcel of tax delin- 13 quent residential rental property subject to the collection of 14 delinquent taxes and accelerated foreclosure under this act. If 15 the collecting unit or private vendor under contract with the 16 collecting unit is unable to ascertain the whereabouts or the 17 post office address of the owner or any person with a legal 18 interest in the tax delinquent residential rental property 19 subject to the collection of delinquent taxes and accelerated 20 foreclosure under this act, service of the notice shall be made 21 by publication. The notice shall be published for 4 successive 22 weeks, once each week, in a newspaper published and circulated in 23 the county in which the tax delinquent residential rental prop- 24 erty is located, if there is one. If no newspaper is published 25 in that county, publication shall be made in a newspaper pub- 26 lished and circulated in an adjoining county. Proof of 27 publication, by affidavit of the printer or publisher of the 06496'98 6 1 newspaper, shall be filed with the register of deeds in the 2 county in which the tax delinquent residential rental property is 3 located. This publication shall be instead of personal service 4 on the owner or any person with a legal interest in the tax 5 delinquent residential rental property whose whereabouts cannot 6 be ascertained. 7 (2) The notice required under subsection (1) shall include, 8 but is not limited to, all of the following: 9 (a) A statement that taxes levied on the tax delinquent res- 10 idential rental property are delinquent and that the tax delin- 11 quent residential rental property is scheduled for accelerated 12 foreclosure. 13 (b) Instructions for redemption, including a statement of 14 all delinquent taxes. 15 (c) The time, date, and location of the forfeiture hearing 16 authorized under section 9 at which the occupant, the owner, or a 17 person with a legal interest in the tax delinquent residential 18 rental property may object to the forfeiture of the tax delin- 19 quent residential rental property for any of the reasons set 20 forth in section 98 of the general property tax act, MCL 211.98. 21 (d) A statement setting forth all of the following: 22 (i) If the occupant of the tax delinquent residential prop- 23 erty is making payments to a lessor or land contract vendor pur- 24 suant to a lease or land contract, the occupant may begin to make 25 those payments to an escrow account. 26 (ii) The proceeds of an escrow account established pursuant 27 to subparagraph (i) may be turned over to the collecting unit to 06496'98 7 1 pay all delinquent taxes and any unpaid tax levied on the tax 2 delinquent residential rental property in the current tax year. 3 (iii) If the occupant makes the payments due under the lease 4 or land contract into an escrow account established pursuant to 5 subparagraph (i), the lessor or land contract vendor shall not 6 commence an action against the occupant in any court or before 7 any administrative agency as a result of the nonpayment of the 8 lease or land contract payments. 9 Sec. 8. (1) The collecting unit shall send a list of all 10 tax delinquent residential rental property for which it has con- 11 ducted a title search pursuant to section 6 to the family inde- 12 pendence agency. 13 (2) The family independence agency shall determine, and 14 shall inform the collecting unit, if it is making vendor payments 15 to the owner of any parcel of tax delinquent residential rental 16 property included in the list submitted under subsection (1). 17 (3) If the family independence agency determines that it is 18 making vendor payments to the owner of tax delinquent residential 19 rental property included in the list submitted under subsection 20 (1), the family independence agency shall make all future vendor 21 payments for that tax delinquent residential rental property to 22 an escrow account until the escrow account contains a sufficient 23 amount to satisfy all delinquent taxes and any unpaid tax levied 24 on the tax delinquent residential rental property in the current 25 tax year. The family independence agency shall advise the vendor 26 that the proceeds of the escrow account may be turned over to the 27 collecting unit for payment of all delinquent taxes. 06496'98 8 1 (4) A vendor shall not commence an action against the family 2 independence agency in any court or before any administrative 3 agency as a result of the deposit of vendor payments into an 4 escrow account under this section. 5 Sec. 9. (1) If delinquent taxes levied on the tax delin- 6 quent residential rental property are not paid within 6 months of 7 the notice provided under section 7, the collecting unit may 8 petition the circuit court in the county in which the tax delin- 9 quent residential rental property is located to enter a judgment 10 forfeiting the tax delinquent residential rental property to the 11 local unit of government in which the tax delinquent residential 12 rental property is located. A judgment forfeiting the title to 13 tax delinquent residential rental property under this section 14 forfeits title to all parcels of tax delinquent residential 15 rental property set forth on a separate attachment to the com- 16 plaint and incorporated into the complaint by reference. 17 (2) In a forfeiture action brought under this section, the 18 delinquent property taxes and the notice provided under sections 19 5 and 7 are prima facie evidence in support of a judgment for- 20 feiting the title to the tax delinquent residential rental prop- 21 erty to the local unit of government in which the tax delinquent 22 residential rental property is located. 23 (3) If the court enters a judgment forfeiting the title to 24 the tax delinquent residential rental property to the local unit 25 of government in which the tax delinquent residential rental 26 property is located, the court shall issue a tax deed for the tax 06496'98 9 1 delinquent residential rental property to the local unit of 2 government. 3 Sec. 10. (1) If the circuit court of the county in which 4 tax delinquent residential rental property is located enters a 5 judgment forfeiting the tax delinquent residential rental prop- 6 erty to the local unit of government in which the tax delinquent 7 residential rental property is located and issues a tax deed for 8 the tax delinquent residential rental property to the local unit 9 of government pursuant to section 9, the collecting unit or a 10 private vendor under contract with the collecting unit shall send 11 notice of that forfeiture by certified mail, return receipt 12 requested, to the occupant, the owner, and all persons with a 13 legal interest in each parcel of tax delinquent residential prop- 14 erty forfeited. If the collecting unit or private vendor under 15 contract with the collecting unit is unable to ascertain the 16 whereabouts or the post office address of the owner or any person 17 with a legal interest in the tax delinquent residential property 18 forfeited, service of the notice shall be made by publication. 19 The notice shall be published for 4 successive weeks, once each 20 week, in a newspaper published and circulated in the county in 21 which the forfeited tax delinquent residential property is 22 located, if there is one. If no newspaper is published in that 23 county, publication shall be made in a newspaper published and 24 circulated in an adjoining county. Proof of publication, by 25 affidavit of the printer or publisher of the newspaper, shall be 26 filed with the register of deeds in the county in which the 27 forfeited tax delinquent residential property is located. This 06496'98 10 1 publication shall be instead of personal service on the owner and 2 any person with a legal interest in the tax delinquent residen- 3 tial rental property whose whereabouts cannot be ascertained. 4 (2) The notice required under subsection (1) shall include, 5 but is not limited to, all of the following: 6 (a) A statement that the court entered a judgment forfeiting 7 the title to the tax delinquent residential rental property and 8 issued a tax deed to that tax delinquent residential rental prop- 9 erty to the local unit of government in which the tax delinquent 10 residential rental property is located. 11 (b) A statement that the collecting unit may commence a 12 quiet title action for that tax delinquent residential rental 13 property if it is not redeemed within 90 days of notice under 14 this section. 15 (c) Instructions for redemption, including a statement of 16 all delinquent taxes due. 17 (d) The time, date, and location of the hearing authorized 18 under section 11 at which the owner or a person with a legal 19 interest in the tax delinquent residential rental property may 20 object to the accelerated foreclosure of the tax delinquent resi- 21 dential rental property. 22 Sec. 11. (1) Unless redeemed, not sooner than 90 days after 23 notice is provided to the occupant, the owner, and all persons 24 with a legal interest in each parcel of tax delinquent residen- 25 tial rental property as provided in section 10, the collecting 26 unit may schedule a hearing to show cause why absolute title to 27 the tax delinquent residential rental property should not vest in 06496'98 11 1 the local unit of government in which the tax delinquent 2 residential rental property is located. 3 (2) A hearing under subsection (1) may be conducted by an 4 existing department within the collecting unit, an entity created 5 by the collecting unit for that purpose, or a private vendor 6 under contract with the collecting unit or entity created by the 7 collecting unit. 8 (3) The occupant, the owner, or any person with a legal 9 interest in the tax delinquent residential rental property may 10 appear at the hearing held under this section and redeem the tax 11 delinquent residential rental property or show cause why title to 12 the tax delinquent residential rental property should not vest in 13 the local unit of government in which the tax delinquent residen- 14 tial rental property is located for any of the reasons set forth 15 in section 98 of the general property tax act, MCL 211.98. 16 (4) Any determination made at the hearing conducted under 17 this section is prima facie evidence in a quiet title action 18 brought in the circuit court in the county in which the tax 19 delinquent residential rental property is located. 20 Sec. 12. (1) After the hearing provided for in section 11, 21 a collecting unit may bring a quiet title action in the circuit 22 court in the county in which the tax delinquent residential 23 rental property is located. A quiet title action under this sec- 24 tion shall determine title for all parcels of previously for- 25 feited tax delinquent residential rental property set forth on a 26 separate attachment to the complaint and incorporated into the 27 complaint by reference. 06496'98 12 1 (2) If a collecting unit brings a quiet title action under 2 subsection (1) and the circuit court enters a judgment vesting 3 absolute title to the tax delinquent residential rental property 4 in the local unit of government in which the tax delinquent resi- 5 dential rental property is located, all prior interests in the 6 tax delinquent residential rental property are canceled. 7 Sec. 13. If the circuit court enters a judgment vesting 8 absolute title to tax delinquent residential rental property in 9 the local unit of government in which the tax delinquent residen- 10 tial rental property is located pursuant to section 12, all of 11 the following apply: 12 (a) Any funds in an escrow account established by an occu- 13 pant pursuant to section 7 shall first be applied to satisfy the 14 delinquent taxes and any unpaid tax levied on that tax delinquent 15 residential rental property in the current tax year. Any remain- 16 ing balance shall be disbursed to the person who acquires title 17 to the tax delinquent residential rental property from the local 18 unit of government. 19 (b) Any funds in an escrow account established by the family 20 independence agency pursuant to section 8 shall first be applied 21 to satisfy the delinquent taxes and any unpaid tax levied on that 22 tax delinquent residential rental property in the current tax 23 year. Any remaining balance shall be returned to the family 24 independence agency to offset costs incurred. 25 (c) The local unit of government shall attempt to dispose of 26 the tax delinquent residential rental property in a manner that 27 does not displace an occupant who made payments in good faith 06496'98 13 1 either to a lessor, a land contract vendor, or an escrow account 2 established pursuant to section 7. 3 (d) The local unit of government shall not adversely alter 4 the terms of the occupant's lease or land contract. 5 (e) The local unit of government shall offer the occupant 6 the right of first refusal to purchase the tax delinquent resi- 7 dential rental property from the local unit of government or 8 shall give the occupant priority to homestead the tax delinquent 9 residential rental property if the tax delinquent residential 10 rental property is referred to a homestead program under the 11 Michigan urban homestead act. 12 (f) If the tax delinquent residential rental property is 13 occupied by more than 1 family, the local unit of government 14 shall offer the occupants the opportunity to form a consumer 15 housing cooperative pursuant to the state housing development 16 authority act of 1966, 1966 PA 346, MCL 125.1401 to 125.1499c. 17 Sec. 14. If a circuit court enters a judgment vesting abso- 18 lute title to the tax delinquent residential rental property in 19 the local unit of government in which the tax delinquent residen- 20 tial rental property is located pursuant to section 12, subject 21 to section 13, the local unit of government may do 1 or more of 22 the following with the tax delinquent residential rental 23 property: 24 (a) Demolish any unsafe structure located on the tax delin- 25 quent residential rental property. 26 (b) Remediate any environmental contamination found on the 27 tax delinquent residential rental property or notify the 06496'98 14 1 department of environmental quality or other appropriate 2 organization regarding the existence of environmental contamina- 3 tion on the tax delinquent residential rental property. 4 (c) Sell the tax delinquent residential rental property to a 5 private purchaser by auction or direct marketing. 6 (d) Transfer the tax delinquent residential rental property 7 to a homestead program if a homestead program exists and the tax 8 delinquent residential rental property meets the specifications 9 of the homestead program. 10 (e) Transfer the tax delinquent residential rental property 11 to a nonprofit organization for rehabilitation and reuse. 12 (f) Retain the tax delinquent residential rental property 13 for a specific public purpose, including, but not limited to, a 14 park, zoo, or university, or as part of an existing project with 15 an anticipated completion date of not more than 2 years after the 16 date title to the tax delinquent residential rental property 17 vests in the local unit of government. 06496'98 Final page. 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