as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to taxation; authorizing sale of tax liens; 1.3 proposing coding for new law as Minnesota Statutes, 1.4 chapter 280A. 1.5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.6 Section 1. [280A.01] [DEFINITIONS.] 1.7 Subdivision 1. [APPLICATION.] For purposes of this 1.8 chapter, the following terms have the meanings given. 1.9 Subd. 2. [FACE AMOUNT.] The "face amount of the tax lien" 1.10 or "face amount" means the sum of the following amounts: 1.11 (1) the unpaid real property taxes and assessments; 1.12 (2) penalties; 1.13 (3) fees and costs, including the allocable costs of any 1.14 publications made and notices given by the joint powers agency 1.15 under section 280A.04, subdivision 2; and 1.16 (4) interest accrued on amounts listed in clauses (1) to 1.17 (3) at the applicable statutory rate through the date of sale of 1.18 the tax lien. 1.19 Subd. 3. [TAXING AUTHORITY.] "Taxing authority" has the 1.20 meaning given in section 275.065, subdivision 1. 1.21 Subd. 4. [TREASURER.] "Treasurer" means the county 1.22 treasurer or the equivalent officer of another taxing authority 1.23 or a designee of the treasurer or other officer. 1.24 [EFFECTIVE DATE.] This section is effective the day 1.25 following final enactment. 2.1 Sec. 2. [280A.02] [AUTHORITY TO SELL TAX LIENS.] 2.2 Subdivision 1. [GENERAL AUTHORITY.] As provided in this 2.3 chapter, a taxing authority may sell its allocable portion of 2.4 tax liens securing delinquent real property taxes and 2.5 assessments or other charges that are made a lien on real 2.6 property for the benefit of the taxing authority. The allocable 2.7 portion of a tax lien is for all purposes itself a "tax lien" 2.8 for purposes of this chapter. In addition, if a property 2.9 encumbered by a lien for delinquent real property taxes and 2.10 assessments or other charges has already been bid in for the 2.11 state under section 280.01, the taxing authority may, on behalf 2.12 of the state, create a new tax lien on the property in the face 2.13 amount set forth in subdivision 3 and sell the tax lien as 2.14 provided in this chapter. If a taxing authority sells a tax 2.15 lien under this chapter, the provisions of chapter 280 no longer 2.16 apply to the tax lien. If the taxing authority repurchases the 2.17 tax lien as permitted by this chapter, all the rights of the 2.18 state, the applicable county, and the taxing authority with 2.19 respect to the tax lien are restored as if the tax lien had 2.20 never been sold. A taxing authority may not sell any tax lien 2.21 for which the taxes secured by the tax lien are subject to a 2.22 proceeding under chapter 278 that has not been dismissed or 2.23 otherwise terminated. 2.24 Subd. 2. [COUNTY ACTION; EFFECT.] A county may elect to 2.25 sell the tax liens of all of the taxing authorities having a tax 2.26 lien on a property or it may elect to sell only its own tax lien 2.27 on the property. If a county elects to sell all of the tax 2.28 liens on a property, the county may sell all the tax liens on 2.29 behalf of all taxing authorities without any further action, 2.30 consent, or approval by the taxing authorities other than the 2.31 county. In such case, whenever this chapter requires or permits 2.32 a taxing authority to take action, the taking of that action by 2.33 the county is deemed to be the taking of that action by and on 2.34 behalf of each of the participating taxing authorities. If the 2.35 county does not elect to sell its own tax lien on a property, 2.36 each taxing authority other than the county may independently 3.1 sell its own tax liens on the property without any further 3.2 action, consent, or approval by the county or any other taxing 3.3 authority. 3.4 Subd. 3. [AMOUNT OF LIEN; PARTIAL PAYMENTS.] (a) The 3.5 amount of a tax lien sold under this chapter equals the face 3.6 amount of the tax lien. 3.7 (b) Any partial payments received on a tax lien are applied 3.8 first to accrued interest and then to the face amount of the tax 3.9 lien. 3.10 Subd. 4. [NOT A BORROWING.] A sale of a tax lien or tax 3.11 liens by a taxing authority under this chapter is a sale and is 3.12 not a borrowing by the taxing authority. 3.13 [EFFECTIVE DATE.] This section is effective the day 3.14 following final enactment. 3.15 Sec. 3. [280A.03] [PROCEDURES FOR SALE OF TAX LIENS.] 3.16 Subdivision 1. [SALE TO JOINT POWER AGENCY.] A taxing 3.17 authority may, from time to time, sell all or a portion of its 3.18 then delinquent tax liens through a negotiated sale under the 3.19 procedures provided in this chapter to a joint powers agency 3.20 organized by two or more counties under section 471.59. A 3.21 taxing authority selling tax liens to a joint powers agency need 3.22 not be a member of the joint powers agency. A joint powers 3.23 agency formed to purchase and sell tax liens under this chapter 3.24 is deemed to be exercising common powers of its member counties 3.25 for purposes of section 471.59. 3.26 Subd. 2. [TERMS OF AGREEMENT.] A taxing authority may 3.27 enter into a purchase and sale agreement with a joint powers 3.28 agency for the sale of tax liens by the taxing authority to the 3.29 joint powers agency. The taxing authority may include in the 3.30 agreement the terms, provisions, conditions, representations, 3.31 and warranties that it determines are necessary or desirable and 3.32 are consistent with the provisions of this chapter. The 3.33 agreement must specify the purchase price of the tax liens to be 3.34 paid to the taxing authority and any other amounts that may be 3.35 made available to the taxing authority on a contingent basis 3.36 under the terms of the agreement. The purchase price may be 4.1 more or less than the face amount of the tax liens purchased by 4.2 the joint powers agency and may also include noncash 4.3 consideration. The agreement may require the taxing authority 4.4 to repurchase a tax lien, or to substitute another tax lien of 4.5 equivalent value, under conditions that may be specified in the 4.6 agreement. The agreement may provide that the taxing authority 4.7 is obligated to sell to the joint powers agency subsequent tax 4.8 liens encumbering the property encumbered by the tax liens 4.9 originally sold on substantially the same terms on which the 4.10 original tax liens were sold. 4.11 [EFFECTIVE DATE.] This section is effective the day 4.12 following final enactment. 4.13 Sec. 4. [280A.04] [SALES OF TAX LIENS BY JOINT POWERS 4.14 AGENCY.] 4.15 Subdivision 1. [BULK SALE.] A joint powers agency 4.16 organized for the purposes of this chapter may sell tax liens in 4.17 bulk through a negotiated sale under the procedures provided in 4.18 this section. The joint powers agency shall establish the terms 4.19 and conditions of a sale of tax liens. No provision of law that 4.20 requires competitive bidding or other procedures relating to the 4.21 letting of government contracts applies to the sale of tax liens 4.22 by a joint powers agency. 4.23 Subd. 2. [NOTICE OF SALE.] The joint powers agency shall 4.24 publish a notice of its intention to sell a tax lien or tax 4.25 liens through a negotiated sale. The notice must advise that a 4.26 request for statements of interest is available at the office of 4.27 the joint powers agency, and may require the submission of any 4.28 information or documents that the joint powers agency deems 4.29 appropriate. The notice need not identify separately the tax 4.30 liens intended to be sold, but may state the approximate number 4.31 and aggregate amount of the tax liens and state that a copy of a 4.32 list of the tax liens may be obtained from the office of the 4.33 joint powers agency upon request. The notice must be published 4.34 in a newspaper of general circulation in the state not less than 4.35 30 days prior to the date designated by the joint powers agency 4.36 for the receipt of statements of interest. 5.1 Subd. 3. [AWARD OF SALE.] Notwithstanding any other law to 5.2 the contrary, in order to determine whether or not to award a 5.3 sale of tax liens and to determine to whom to award a sale of 5.4 tax liens, the joint powers agency may consider all factors that 5.5 the governing body of the joint powers agency deems relevant to 5.6 the best interests of the taxing authorities from which the tax 5.7 liens are to be purchased, including but not limited to the 5.8 price at which the tax liens are offered to be purchased, as 5.9 well as the terms and conditions of the purchase and sale 5.10 agreements proposed by the prospective purchasers. The joint 5.11 powers agency may negotiate with one or more prospective 5.12 purchasers to determine the terms and conditions under which tax 5.13 liens are proposed to be purchased. 5.14 Subd. 4. [TERMS OF AGREEMENT.] The joint powers agency may 5.15 enter into one or more purchase and sale agreements for the sale 5.16 of tax liens by the joint powers agency. The agency may include 5.17 in the agreements the terms, provisions, conditions, 5.18 representations, and warranties it determines are necessary or 5.19 desirable and are consistent with the provisions of this 5.20 chapter. Each agreement must specify the purchase price to be 5.21 paid to the joint powers agency and any other amounts that may 5.22 be made available to the joint powers agency on a contingent 5.23 basis under the terms of the agreement. The purchase price may 5.24 be more or less than the face amount of the tax liens purchased 5.25 by the tax lien purchaser and may include noncash 5.26 consideration. In connection with the sale of the tax liens 5.27 under the agreement, the joint powers agency may assign to the 5.28 tax lien purchaser all of its right, title, and interest in and 5.29 to the purchase and sale agreement or agreements between the 5.30 joint powers agency and the counties from which the tax liens 5.31 were purchased by the joint powers agency. 5.32 Subd. 5. [AUTHORITY TO CANCEL.] The joint powers agency 5.33 may postpone or cancel any proposed sale of tax liens for which 5.34 notice has been published. The joint powers agency is not 5.35 liable for any damages as a result of cancellation or 5.36 postponement of a proposed sale of tax liens, nor does any cause 6.1 of action arise from a cancellation or postponement. 6.2 [EFFECTIVE DATE.] This section is effective the day 6.3 following final enactment. 6.4 Sec. 5. [280A.05] [TAX LIEN CERTIFICATES.] 6.5 Subdivision 1. [OPERATION.] (a) Upon the sale by a taxing 6.6 authority of a tax lien to a joint powers agency, the treasurer 6.7 shall deliver to the joint powers agency a tax lien certificate 6.8 evidencing the sale and the transfer of the tax lien by the 6.9 taxing authority to the joint powers agency. 6.10 (b) A tax lien certificate operates to transfer and assign 6.11 the tax lien upon the property described in the certificate for: 6.12 (1) the unpaid real property taxes and assessments; 6.13 (2) other fees and costs, including the costs of any 6.14 publications made and notices given under section 280A.04, 6.15 subdivision 2; 6.16 (3) all interest and penalties accrued on the tax lien 6.17 through the date of sale; and 6.18 (4) accrued interest on all unpaid amounts from the date of 6.19 sale to the date of payment. 6.20 (c) A tax lien certificate is freely transferable by its 6.21 holder. The treasurer shall keep a record of all tax liens 6.22 transferred as provided by this section. 6.23 Subd. 2. [CONTENTS.] (a) A tax lien certificate must 6.24 contain: 6.25 (1) a transfer and assignment by the taxing authority of 6.26 the tax lien sold to the joint powers agency; 6.27 (2) the date of the sale; 6.28 (3) the aggregate amount of the tax lien transferred and 6.29 the items of unpaid real property taxes and assessments and 6.30 other charges; 6.31 (4) the costs of any publications made and notices given 6.32 under this chapter; 6.33 (5) all interest and penalties accrued on the tax lien 6.34 through the date of sale comprising the tax lien; 6.35 (6) a statement that the tax lien certificate will bear 6.36 interest at the rate specified in section 279.03, subdivision 7.1 1a; and 7.2 (7) a description of the property by block and lot or by 7.3 such other identification sufficient to identify the property 7.4 subject to the tax lien. 7.5 (b) The treasurer shall, by manual or facsimile signature: 7.6 (1) execute a tax lien certificate; and 7.7 (2) acknowledge the certificate in the manner in which a 7.8 deed must be acknowledged to be recorded. 7.9 (c) A tax lien certificate may evidence the transfer of 7.10 more than one tax lien on more than one property. 7.11 [EFFECTIVE DATE.] This section is effective the day 7.12 following final enactment. 7.13 Sec. 6. [280A.06] [LOST TAX LIEN CERTIFICATE.] 7.14 If any tax lien certificate is lost, the treasurer may, 7.15 upon satisfactory proof of the loss, direct the execution and 7.16 delivery of a duplicate certificate to the person or persons who 7.17 appear entitled to the certificate. The treasurer may require a 7.18 bond of indemnity to the taxing authority as a condition of 7.19 executing a duplicate certificate. 7.20 [EFFECTIVE DATE.] This section is effective the day 7.21 following final enactment. 7.22 Sec. 7. [280A.07] [RECORDING OF TAX LIEN CERTIFICATES.] 7.23 A tax lien certificate and any assignment or discharge of a 7.24 certificate, duly acknowledged, are deemed conveyances within 7.25 the meaning of section 507.01 and may be recorded (in the case 7.26 of unregistered real estate) in the office of the county 7.27 recorder of the county where the property is located or 7.28 registered (in the case of registered real estate) in the office 7.29 of the registrar of titles of the county where the property is 7.30 located under section 508.55. Tax lien certificates and all 7.31 assignments and discharges of certificates must be recorded by 7.32 the county recorder or registered by the registrar of titles in 7.33 the same manner as mortgages and assignments and discharges of 7.34 mortgages. Notwithstanding section 272.12, the county recorder 7.35 or the registrar of titles shall not refuse to receive or record 7.36 a tax lien certificate and any assignment or discharge of a 8.1 certificate because of any outstanding delinquent taxes due on 8.2 the related property. Notwithstanding section 507.34, neither 8.3 the tax lien nor the rights transferred or created by a tax lien 8.4 certificate is impaired by the failure of the county recorder or 8.5 registrar of titles to record or register a tax lien certificate 8.6 made by the county through the treasurer. 8.7 [EFFECTIVE DATE.] This section is effective the day 8.8 following final enactment. 8.9 Sec. 8. [280A.08] [RIGHTS OF HOLDER OF TAX LIEN 8.10 CERTIFICATE; DISCHARGE OF TAX LIEN.] 8.11 Subdivision 1. [RIGHTS OF LIENHOLDER.] A holder of a tax 8.12 lien under a tax lien certificate has the right to receive all 8.13 amounts collected by the county or the taxing authority in 8.14 payment of amounts due on the tax lien, including all payments 8.15 of the unpaid real property taxes, assessments, penalties, and 8.16 costs, plus interest accrued on those amounts to the date of 8.17 payment of the tax lien in full. The treasurer of the county in 8.18 which any property encumbered by a tax lien transferred under 8.19 this chapter and recorded as provided in section 280A.07 shall 8.20 pay to the holder of the tax lien certificate or its designee 8.21 designated in writing promptly upon receipt any payments made on 8.22 a transferred tax lien. Any person having a legal or beneficial 8.23 interest in the property affected by a tax lien certificate may 8.24 satisfy it at any time upon payment of the amounts then due, 8.25 including all accrued interest on the lien. Upon satisfaction 8.26 of the tax lien, the holder shall issue to the person that 8.27 satisfied the tax lien a certificate of discharge, certifying 8.28 that the tax lien has been paid or has been otherwise satisfied, 8.29 in a recordable or registrable form approved by the county 8.30 recorder of the county where the property is located. 8.31 Subd. 2. [DISCHARGE OF LIEN.] A tax lien sold under this 8.32 chapter may be discharged by presenting the certificate of 8.33 discharge issued by the holder of the tax lien under subdivision 8.34 1 to the county recorder or registrar of titles of the county 8.35 where the property is located. 8.36 [EFFECTIVE DATE.] This section is effective the day 9.1 following final enactment. 9.2 Sec. 9. [280A.09] [EXEMPTION FROM TAXATION.] 9.3 Notwithstanding any other law to the contrary, tax liens 9.4 and tax lien certificates are exempt from taxation by the state 9.5 or any political subdivision of the state, including the 9.6 mortgage registry taxes imposed by chapter 287 but excluding the 9.7 recording fees imposed by chapter 357. This section does not 9.8 exempt the real property affected by any tax lien, or the 9.9 interest paid on the tax lien, from taxation. 9.10 [EFFECTIVE DATE.] This section is effective the day 9.11 following final enactment. 9.12 Sec. 10. [280A.10] [FORECLOSURE OF TAX LIENS.] 9.13 (a) If the amount of any tax lien transferred by a tax lien 9.14 certificate is not paid by the later of the date of expiration 9.15 of the applicable redemption period specified in chapter 281 or 9.16 the expiration of a confession of judgment entered into under 9.17 section 279.37, the tax lien may be foreclosed by advertisement 9.18 in the same manner as a mortgage as provided in chapter 580, 9.19 except that the following rules apply: 9.20 (1) the property owner is deemed to be the mortgagor, the 9.21 tax lien certificate holder is deemed to be the mortgagee, and 9.22 the tax lien certificate is deemed to be the mortgage note and 9.23 mortgage; 9.24 (2) the tax lien certificate is deemed to contain a power 9.25 of sale and the failure of the property owner to redeem the tax 9.26 lien is deemed to be a default by which the power of sale has 9.27 become operative; 9.28 (3) sections 580.23 through 580.27 and 582.032 do not apply 9.29 and neither the property owner, the property owner's personal 9.30 representatives or assigns, any lien creditor, nor any other 9.31 person may redeem the property following the foreclosure sale of 9.32 the property and, notwithstanding section 580.12, a certificate 9.33 of sale of the property may state that no person has any right 9.34 to redeem the property from the foreclosure; and 9.35 (4) notwithstanding section 582.01 or any other law to the 9.36 contrary, the tax lien certificate holder may recover from the 10.1 proceeds of foreclosure reasonable attorney fees and 10.2 disbursements relating to the foreclosure, together with the 10.3 expenses of the sale. 10.4 (b) In any conflict between this chapter and any other law 10.5 relating to the foreclosure of mortgages, this chapter has 10.6 precedence over the other law. 10.7 [EFFECTIVE DATE.] This section is effective the day 10.8 following final enactment. 10.9 Sec. 11. [280A.11] [REDEMPTION.] 10.10 Subdivision 1. [NOTICE OF EXPIRATION OF REDEMPTION 10.11 PERIOD.] The provisions of chapter 281 relating to the 10.12 redemption of tax liens sold under this chapter continue to 10.13 apply to tax liens sold under this chapter. The county auditor 10.14 shall give notice of the expiration of the applicable redemption 10.15 period of any tax lien sold under this chapter in the same 10.16 manner as provided for tax-forfeited property under chapter 281. 10.17 Subd. 2. [LIMITATIONS ON ADVERSE CLAIMS.] No cause of 10.18 action or defense claiming that any tax lien certificate or tax 10.19 lien is invalid may be asserted or maintained upon any claim 10.20 adverse to the holder of the tax lien certificate or the 10.21 holder's successors in interest, including but not limited to 10.22 any claim based upon any failure, omission, error, or defect 10.23 described in section 284.28, subdivision 1, unless the cause of 10.24 action or defense is asserted in an action commenced before the 10.25 expiration of the time for redemption, as provided by section 10.26 281.21, or by any other law hereafter enacted providing for 10.27 notice of expiration of time for redemption and the filing 10.28 thereof. 10.29 [EFFECTIVE DATE.] This section is effective the day 10.30 following final enactment. 10.31 Sec. 12. [280A.12] [PRIORITY AND PAYMENT OF TAX LIENS; 10.32 EFFECT OF FORFEITURE TO STATE.] 10.33 Subdivision 1. [PRIORITY.] Notwithstanding section 280.39 10.34 or any other law to the contrary, if more than one tax lien is 10.35 entitled to foreclosure under this chapter on a parcel of real 10.36 property, all the tax liens rank on a parity. After the payment 11.1 of all legal fees and costs, allowances, and disbursements 11.2 relating to the foreclosure, the holders of all the tax liens 11.3 must be paid from the proceeds of the sale, so far as the 11.4 proceeds suffice to pay the same, the amounts of their 11.5 respective tax liens in the ratio to which the amount of the tax 11.6 lien of each holder bears to the aggregate of all the amounts. 11.7 All tax liens foreclosed upon in a foreclosure sale have 11.8 priority over any other lien on the property sold in foreclosure 11.9 regardless as to when the other lien became a lien on the 11.10 property. 11.11 Subd. 2. [FORFEITED PROPERTY.] Notwithstanding any law to 11.12 the contrary, if a parcel of property encumbered by one or more 11.13 tax liens sold under this chapter forfeits to the state for the 11.14 nonpayment of other delinquent property taxes, the tax liens 11.15 sold under this chapter continue to be a lien on the property in 11.16 full force and effect, and subject to foreclosure in the same 11.17 manner as if the property had not forfeited to the state, 11.18 regardless of whether the property is (1) retained by the state 11.19 or any other instrumentality or political subdivision of the 11.20 state under chapter 282, or (2) otherwise disposed of under 11.21 chapter 282. Each deed of conveyance of a parcel of state 11.22 forfeited property issued under chapter 282 must state that the 11.23 property is subject to any tax liens sold under this chapter 11.24 that have not been paid. The failure of any conveyance to 11.25 contain such a statement does not affect the validity of any tax 11.26 lien remaining unpaid. 11.27 Subd. 3. [SALE PRIOR TO FORECLOSURE.] If a tax-forfeited 11.28 property is sold prior to foreclosure under this chapter and net 11.29 proceeds of the sale are to be distributed under section 282.08, 11.30 clause (4)(iii), the net proceeds that otherwise would have been 11.31 distributed to taxing authorities that have sold their tax liens 11.32 on the property must be distributed to the taxing authorities 11.33 that have not sold their tax liens on the property in proportion 11.34 to their percentage interests specified in section 282.08, 11.35 clause (4)(iii). 11.36 [EFFECTIVE DATE.] This section is effective the day 12.1 following final enactment.