Montana Gov. Steve Bullock signed SB 253, legislation to revise the tax lien and tax deed laws in the state. The new law revises the tax lien and tax deed process for residential, agricultural and forest property with a dwelling.
It is effective immediately.
The bill passed the state House by an 89-8 vote with three abstentions, while the state Senate approved it by a 49-1 vote. It was sponsored by state Sen. Cary Smith (R-Billings).
The new law states that if a property tax lien attached to property provided for under the law is not redeemed in the time allowed, the assignee may file an application after the redemption period has expired with the county treasurer for a tax deed for the property. The tax deed must contain the same information as required in section 15-18-211(1). The county treasurer may charge the assignee a $25 application fee, which must be deposited in the county general fund.
An assignee who applies for a tax deed must pay the county treasurer at the time of application:
- The amount required to redeem any unassigned tax liens or tax liens held by other assignees;
- Any delinquent taxes, penalties and interest;
- Current taxes due for the property; and
- The cost of filing the notice of a tax deed application.
Prior to applying for a tax deed, the assignee must notify the parties that a tax deed will be auctioned unless the property tax lien is redeemed before the date of the auction. The notice must be made by certified mail to the current occupant, if any, of the property and to each party, other than a utility, listed on a litigation guarantee, provided that the guarantee:
- Has been approved by the insurance commissioner and issued by a licensed title insurance producer;
- Was ordered on the property by the person required to give notice; and
- Lists the identities and addresses of the parties of record that have an interest or possible claim of an interest in the property designed to disclose all parties of record that would otherwise be necessary to name in a quiet title action.
If the assignee fails to give notice, as evidenced by failure to file proof of notice with the county clerk and recorder, the county treasurer will cancel the property tax lien evidenced by the tax lien certificate and the assignment certificate. After canceling the property tax lien, the county treasurer will file with the county clerk and recorder a notice of cancellation.
The county treasurer may have the county clerk and recorder file the notice of tax deed application, which would remain effective for one year from the date of filing. Proof of notice must be given and must be filed with the county clerk and recorder within 30 days of mailing or publishing the notice. Any person acquiring an interest in the property after the tax deed application notice has been filed will be considered to be on notice of the pending tax deed sale, and no additional notice would be required. The sale of the property will automatically release any filed notice of tax deed application for the property.
If the property is redeemed, the county treasurer will file a release of the notice of tax deed application.
The bill also requires an assignee to apply to the county treasurer for a tax deed.
Upon application for a tax deed, the tax deed would have to be auctioned to the highest bidder. The bill also would require an opening bid at tax deed auction that includes half the assessed value of the property. Specifically, the opening bid for the property must be equal to the sum of:
- The amount required to redeem the tax lien, including delinquent taxes, penalties, interests and costs;
- Amounts paid by the assignee upon application for the tax deed; and
- An amount equal to half of the most recent assessed value of the land and of the dwelling or half of the value of the land and dwelling as determined in an independent appraisal. If the opening bid is based on an independent appraisal, the appraisal must be provided to the county treasurer, must meet the standards set by the Montana Board of Real Estate Appraisers, and must have been conducted within six months of the date of the auction.
The county treasurer is required to distribute the proceeds of a tax deed auction. The true property owner and lienholders of a tax deed auctioned property may request funds in excess of the difference between the sale proceeds and the opening bid.
The bill states: “To the extent possible, the surplus funds must be distributed by the county treasurer to satisfy in full each person notified pursuant [the bill’s provisions] 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, the claimant must file a notarized statement of claim with the county treasurer within 30 days of the auction. The claim must include the particulars of the lien and the amounts currently due. Any lienholder claim that is not filed within the 30-day deadline is barred.
“Within 90 days after the claim period expires, the county treasurer shall 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 the priority of the claims must be paid from the surplus funds.”
The new law amends Section 15-18-413 MCA to state that all deeds executed more than three years after the applicable attachment of the tax lien convey to the grantee absolute title to the property described in the deed as of the date of issuance of the deed. If any tax deed or deed purporting to be a tax deed is issued more than three years and 30 days after the date of the attachment of the tax lien pursuant to 15-18-211, the grantee may be given notice entitled “notice of claim of a tax title.”
The notice must:
- Describe all property claimed to have been acquired by a tax deed;
- Contain an estimate of the amount due on the property for delinquent taxes,interest, penalties and costs;
- Contain a statement that for further specific information, reference must be made to the records in the office of the county treasurer;
- List the name and address of record of the person in whose name the property was assessed or taxed; and
- Contain a statement that demand is made that the true owner shall, within 30 days after the later of service or the first publication of the notice, pay to the county treasurer for use by the claimant the amount of taxes, interest, penalties and costs as the same appear in the records of the county treasurer to redeem the property or the true owner may bring a suit to quiet the true owner’s title or to set aside the tax deed.
Provided that the statutory requirements for a notice of intended issuance of a tax deed have been complied with and if within the 30-day period the taxes, interest, penalties and costs are not paid or a quiet title action is not brought, all defects in the tax proceedings and any right of redemption will be considered waived. Except as provided in subsection (6)(b), after the 30-day period, the title to the property described in the notice and in the tax deed will be valid and binding, irrespective of any irregularities, defects or omissions in any of the provisions of the laws of Montana regarding the assessment, levying of taxes or sale of property for taxes, whether or not the irregularities, defects or omissions could void the proceedings. These proceedings will be void if the taxes were not delinquent or have been paid.