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SB-1409, As Passed Senate, September 20, 2006

SUBSTITUTE FOR

SENATE BILL NO. 1409

A bill to amend 1893 PA 206, entitled

"The general property tax act,"

by amending sections 78i and 78k (MCL 211.78i and 211.78k), as

amended by 2003 PA 263.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 78i. (1) Not later than May 1 immediately succeeding the

forfeiture of property to the county treasurer under section 78g,

the foreclosing governmental unit shall initiate a search of

records identified in subsection (6) to identify the owners of a

property interest in the property who are entitled to notice under

this section of the show cause hearing under section 78j and the

foreclosure hearing under section 78k. The foreclosing governmental

unit may enter into a contract with 1 or more authorized

representatives to perform a title search or may request from 1 or

more authorized representatives another title search product to

identify the owners of a property interest in the property as

required under this subsection or to perform other functions

required for the collection of delinquent taxes under this act.

(2) After conducting the search of records under subsection

(1), the foreclosing governmental unit or its authorized

representative shall determine the address reasonably calculated to

apprise those owners of a property interest of the show cause

hearing under section 78j and the foreclosure hearing under section

78k and shall send notice of the show cause hearing under section

78j and the foreclosure hearing under section 78k to those owners,

and to a person entitled to notice of the return of delinquent

taxes under section 78a(4), ~~and to a person to whom a tax deed for~~

~~property returned for delinquent taxes was issued pursuant to~~

~~section 72 as determined by the records of the state treasurer or~~

~~county treasurer as applicable,~~ by certified mail, return receipt

requested, not less than 30 days before the show cause hearing. If

after conducting the search of records under subsection (1) the

foreclosing governmental unit is unable to determine an address

reasonably calculated to inform a person with an interest in a

forfeited property, or if the foreclosing governmental unit

discovers a deficiency in notice under subsection (4), the

following shall be considered reasonable steps by the foreclosing

governmental unit or its authorized representative to ascertain the

address of a person entitled to notice under this section or to

ascertain an address necessary to correct the deficiency in notice

under subsection (4):

(a) For an individual, a search of the records of the probate

court for the county in which the property is located.

(b) For an individual, a search of the qualified voter file

established under section 509o of the Michigan election law, 1954

PA 116, MCL 168.509o, which is authorized by this subdivision.

with the county clerk.

(d) For a business entity other than a partnership, a search

of business entity records filed with the department of labor and

economic growth.

(3) The foreclosing governmental unit or its authorized

representative or authorized agent shall make a personal visit to

each parcel of property forfeited to the county treasurer under

section 78g to ascertain whether or not the property is occupied.

If the property appears to be occupied, the foreclosing

governmental unit or its authorized representative shall do all of

the following:

(a) Attempt to personally serve upon a person occupying the

property notice of the show cause hearing under section 78j and the

foreclosure hearing under section 78k.

(b) If a person occupying the property is personally served,

orally inform the occupant that the property will be foreclosed and

the occupants will be required to vacate unless all forfeited

unpaid delinquent taxes, interest, penalties, and fees are paid, of

the time within which all forfeited unpaid delinquent taxes,

interest, penalties, and fees must be paid, and of agencies or

other resources that may be available to assist the owner to avoid

loss of the property.

the advice given, notify the ~~family independence agency~~

department of human services or provide the occupant with the names

and telephone numbers of the agencies that may be able to assist

the occupant.

(d) If the foreclosing governmental unit or its authorized

representative is not able to personally meet with the occupant,

the foreclosing governmental unit or its authorized representative

shall place the notice in a conspicuous manner on the property and

shall also place in a conspicuous manner on the property a notice

that explains, in plain English, that the property will be

foreclosed unless forfeited unpaid delinquent taxes, interest,

penalties, and fees are paid, the time within which forfeited

unpaid delinquent taxes, interest, penalties, and fees must be

paid, and the names, addresses, and telephone numbers of agencies

or other resources that may be available to assist the occupant to

avoid loss of the property. If this state is the foreclosing

governmental unit within a county, the department of ~~natural~~

~~resources~~ treasury shall perform the personal visit to each parcel

of property under this subsection on behalf of this state.

(4) If the foreclosing governmental unit or its authorized

representative discovers any deficiency in the provision of notice,

the foreclosing governmental unit shall take reasonable steps in

good faith to correct that deficiency not later than 30 days before

the show cause hearing under section 78j, if possible.

(5) If the foreclosing governmental unit or its authorized

representative is unable to ascertain the address reasonably

calculated to apprise the owners of a property interest entitled to

notice under this section, or is unable to notify the owner of a

property interest under subsection (2), the notice shall be made by

publication. A notice shall be published for 3 successive weeks,

once each week, in a newspaper published and circulated in the

county in which the property is located, if there is one. If no

paper is published in that county, publication shall be made in a

newspaper published and circulated in an adjoining county. This

publication shall be instead of notice under subsection (2).

(6) The owner of a property interest is entitled to notice

under this section of the show cause hearing under section 78j and

the foreclosure hearing under section 78k if that owner's interest

was identifiable by reference to any of the following sources

before the date that the county treasurer records the certificate

required under section 78g(2):

(a) Land title records in the office of the county register of

deeds.

(b) Tax records in the office of the county treasurer.

(d) Tax records in the office of the local treasurer.

(7) The notice required under subsections (2) and (3) shall

include all of the following:

(a) The date on which the property was forfeited to the county

treasurer.

(b) A statement that the person notified may lose his or her

interest in the property as a result of the foreclosure proceeding

under section 78k.

the street address of the property, if available.

(d) The person to whom the notice is addressed.

(e) The total taxes, interest, penalties, and fees due on the

property.

(f) The date and time of the show cause hearing under section

78j.

(g) The date and time of the hearing on the petition for

foreclosure under section 78k, and a statement that unless the

forfeited unpaid delinquent taxes, interest, penalties, and fees

are paid on or before the March 31 immediately succeeding the entry

of a judgment foreclosing the property under section 78k, or in a

contested case within 21 days of the entry of a judgment

foreclosing the property under section 78k, the title to the

property shall vest absolutely in the foreclosing governmental unit

and that all existing interests in oil or gas in that property

shall be extinguished except the following:

(i) The interests of a lessee or an assignee of an interest of

a lessee under an oil or gas lease in effect as to that property or

any part of that property if the lease was recorded in the office

of the register of deeds in the county in which the property is

located before the date of filing the petition for foreclosure

under section 78h.

(ii) Interests preserved as provided in section 1(3) of 1963 PA

42, MCL 554.291.

(h) An explanation of the person's rights of redemption and

notice that the rights of redemption will expire on the March 31

immediately succeeding the entry of a judgment foreclosing the

property under section 78k, or in a contested case 21 days after

the entry of a judgment foreclosing the property under section 78k.

(8) The published notice required under subsection (5) shall

include all of the following:

(a) A legal description or parcel number of each property.

(b) The street address of each property, if available.

this section who has not been notified under subsection (2) or (3).

(d) The date and time of the show cause hearing under section

78j.

(e) The date and time of the hearing on the petition for

foreclosure under section 78k.

(f) A statement that unless all forfeited unpaid delinquent

taxes, interest, penalties, and fees are paid on or before the

March 31 immediately succeeding the entry of a judgment foreclosing

the property under section 78k, or in a contested case within 21

days of the entry of a judgment foreclosing the property under

section 78k, the title to the property shall vest absolutely in the

foreclosing governmental unit and that all existing interests in

oil or gas in that property shall be extinguished except the

following:

(i) The interests of a lessee or an assignee of an interest of

a lessee under an oil or gas lease in effect as to that property or

any part of that property if the lease was recorded in the office

of the register of deeds in the county in which the property is

located before the date of filing the petition for foreclosure

under section 78h.

(ii) Interests preserved as provided in section 1(3) of 1963 PA

42, MCL 554.291.

(g) A statement that a person with an interest in the property

may lose his or her interest in the property as a result of the

foreclosure proceeding under section 78k and that all existing

interests in oil or gas in that property shall be extinguished

except the following:

(i) The interests of a lessee or an assignee of an interest of

a lessee under an oil or gas lease in effect as to that property or

any part of that property if the lease was recorded in the office

of the register of deeds in the county in which the property is

located before the date of filing the petition for foreclosure

under section 78h.

(ii) Interests preserved as provided in section 1(3) of 1963 PA

42, MCL 554.291.

(9) The owner of a property interest who has been properly

served with a notice of the show cause hearing under section 78j

and the foreclosure hearing under section 78k and who failed to

redeem the property as provided under this act shall not assert any

of the following:

(a) That notice was insufficient or inadequate on the grounds

that some other owner of a property interest was not also served.

(b) That the redemption period provided under this act was

extended in any way on the grounds that some other owner of a

property interest was not also served.

(10) The failure of the foreclosing governmental unit to

comply with any provision of this section shall not invalidate any

proceeding under this act if the owner of a property interest or a

person to whom a tax deed was issued is accorded the minimum due

process required under the state constitution of 1963 and the

constitution of the United States.

(11) As used in this section, "authorized representative"

includes all of the following:

(a) A title insurance company or agent licensed to conduct

business in this state.

(b) An attorney licensed to practice law in this state.

nationally recognized organization in the field of land title

searching.

(d) A person with demonstrated experience searching land title

records, as determined by the foreclosing governmental unit.

(12) The provisions of this section relating to notice of the

show cause hearing under section 78j and the foreclosure hearing

under section 78k are exclusive and exhaustive. Other requirements

relating to notice or proof of service under other law, rule, or

legal requirement are not applicable to notice and proof of service

under this section.

Sec. 78k. (1) If a petition for foreclosure is filed under

section 78h, not later than the date of the hearing, the

foreclosing governmental unit shall file with the clerk of the

circuit court proof of service of the notice of the show cause

hearing under section 78j, proof of service of the notice of the

foreclosure hearing under this section, and proof of the personal

visit to the property and publication under section 78i.

(2) A person claiming an interest in a parcel of property set

forth in the petition for foreclosure may contest the validity or

correctness of the forfeited unpaid delinquent taxes, interest,

penalties, and fees for 1 or more of the following reasons:

(a) No law authorizes the tax.

(b) The person appointed to decide whether a tax shall be

levied under a law of this state acted without jurisdiction, or did

not impose the tax in question.

tax was not legally levied.

(d) The tax has been paid within the time limited by law for

payment or redemption.

(e) The tax was assessed fraudulently.

(f) The description of the property used in the assessment was

so indefinite or erroneous that the forfeiture was void.

(3) A person claiming an interest in a parcel of property set

forth in the petition for foreclosure who desires to contest that

petition shall file written objections with the clerk of the

circuit court and serve those objections on the foreclosing

governmental unit prior to the date of the hearing required under

this section.

(4) If the court determines that the owner of property subject

to foreclosure is a minor heir, is incompetent, is without means of

support, or is undergoing a substantial financial hardship, the

court may withhold that property from foreclosure for 1 year or may

enter an order extending the redemption period as the court

determines to be equitable. If the court withholds property from

foreclosure under this subsection, a taxing unit's lien for taxes

due is not prejudiced and that property shall be included in the

immediately succeeding year's tax foreclosure proceeding.

(5) The circuit court shall enter final judgment on a petition

for foreclosure filed under section 78h at any time after the

hearing under this section but not later than the March 30

immediately succeeding the hearing with the judgment effective on

the March 31 immediately succeeding the hearing for uncontested

cases or 10 days after the conclusion of the hearing for contested

cases. All redemption rights to the property expire on the March 31

immediately succeeding the entry of a judgment foreclosing the

property under this section, or in a contested case 21 days after

the entry of a judgment foreclosing the property under this

section. The circuit court's judgment shall specify all of the

following:

(a) The legal description and, if known, the street address of

the property foreclosed and the forfeited unpaid delinquent taxes,

interest, penalties, and fees due on each parcel of property.

(b) That fee simple title to property foreclosed by the

judgment will vest absolutely in the foreclosing governmental unit,

except as otherwise provided in subdivisions (c) and (e), without

any further rights of redemption, if all forfeited delinquent

taxes, interest, penalties, and fees are not paid on or before the

March 31 immediately succeeding the entry of a judgment foreclosing

the property under this section, or in a contested case within 21

days of the entry of a judgment foreclosing the property under this

section.

for unpaid taxes or special assessments, except future installments

of special assessments and liens recorded by this state or the

foreclosing governmental unit pursuant to the natural resources and

environmental protection act, 1994 PA 451, MCL 324.101 to

324.90106, are extinguished, if all forfeited delinquent taxes,

interest, penalties, and fees are not paid on or before the March

31 immediately succeeding the entry of a judgment foreclosing the

property under this section, or in a contested case within 21 days

of the entry of a judgment foreclosing the property under this

section.

(d) That, except as otherwise provided in subdivisions (c) and

(e), the foreclosing governmental unit has good and marketable fee

simple title to the property, if all forfeited delinquent taxes,

interest, penalties, and fees are not paid on or before the March

31 immediately succeeding the entry of a judgment foreclosing the

property under this section, or in a contested case within 21 days

of the entry of a judgment foreclosing the property under this

section.

(e) That all existing recorded and unrecorded interests in

that property are extinguished, except a visible or recorded

easement or right-of-way, private deed restrictions, interests of a

lessee or an assignee of an interest of a lessee under a recorded

oil or gas lease, interests in oil or gas in that property that are

owned by a person other than the owner of the surface that have

been preserved as provided in section 1(3) of 1963 PA 42, MCL

554.291, or restrictions or other governmental interests imposed

pursuant to the natural resources and environmental protection act,

1994 PA 451, MCL 324.101 to 324.90106, if all forfeited delinquent

taxes, interest, penalties, and fees are not paid on or before the

March 31 immediately succeeding the entry of a judgment foreclosing

the property under this section, or in a contested case within 21

days of the entry of a judgment foreclosing the property under this

section.

(f) A finding that all persons entitled to notice and an

opportunity to be heard have been provided that notice and

opportunity. A person shall be deemed to have been provided notice

and an opportunity to be heard if the foreclosing governmental unit

followed the procedures for provision of notice by mail, for visits

to forfeited property, and for publication under section 78i, or if

1 or more of the following apply:

(i) The person had constructive notice of the hearing under

this section by acquiring an interest in the property after the

date the notice of forfeiture is recorded under section 78g.

(ii) The person appeared at the hearing under this section or

filed written objections with the clerk of the circuit court under

subsection (3) prior to the hearing.

(iii) Prior to the hearing under this section, the person had

actual notice of the hearing.

(g) A judgment entered under this section is a final order

with respect to the property affected by the judgment and except as

provided in subsection (7) shall not be modified, stayed, or held

invalid after the March 31 immediately succeeding the entry of a

judgment foreclosing the property under this section, or for

contested cases 21 days after the entry of a judgment foreclosing

the property under this section.

(6) Except as otherwise provided in subsection (5)(c) and (e),

fee simple title to property set forth in a petition for

foreclosure filed under section 78h on which forfeited delinquent

taxes, interest, penalties, and fees are not paid on or before the

March 31 immediately succeeding the entry of a judgment foreclosing

the property under this section, or in a contested case within 21

days of the entry of a judgment foreclosing the property under this

section, shall vest absolutely in the foreclosing governmental

unit, and the foreclosing governmental unit shall have absolute

title to the property, including all interests in oil or gas in

that property except the interests of a lessee or an assignee of an

interest of a lessee under an oil or gas lease in effect as to that

property or any part of that property if the lease was recorded in

the office of the register of deeds in the county in which the

property is located before the date of filing the petition for

foreclosure under section 78h, and interests preserved as provided

in section 1(3) of 1963 PA 42, MCL 554.291. The foreclosing

governmental unit's title is not subject to any recorded or

unrecorded lien and shall not be stayed or held invalid except as

provided in subsection (7) or (9).

(7) The foreclosing governmental unit or a person claiming to

have a property interest under section 78i in property foreclosed

under this section may appeal the circuit court's order or the

circuit court's judgment foreclosing property to the court of

appeals. An appeal under this subsection is limited to the record

of the proceedings in the circuit court under this section and

shall not be de novo. The circuit court's judgment foreclosing

property shall be stayed until the court of appeals has reversed,

modified, or affirmed that judgment. If an appeal under this

subsection stays the circuit court's judgment foreclosing property,

the circuit court's judgment is stayed only as to the property that

is the subject of that appeal and the circuit court's judgment

foreclosing other property that is not the subject of that appeal

is not stayed. To appeal the circuit court's judgment foreclosing

property, a person appealing the judgment shall pay to the county

treasurer the amount determined to be due to the county treasurer

under the judgment on or before the March 31 immediately succeeding

the entry of a judgment foreclosing the property under this

section, or in a contested case within 21 days of the entry of a

judgment foreclosing the property under this section, together with

a notice of appeal. If the circuit court's judgment foreclosing the

property is affirmed on appeal, the amount determined to be due

shall be refunded to the person who appealed the judgment. If the

circuit court's judgment foreclosing the property is reversed or

modified on appeal, the county treasurer shall refund the amount

determined to be due to the person who appealed the judgment, if

any, and retain the balance in accordance with the order of the

court of appeals.

(8) The foreclosing governmental unit shall record a notice of

judgment for each parcel of foreclosed property in the office of

the register of deeds for the county in which the foreclosed

property is located in a form prescribed by the department of

treasury.

(9) After the entry of a judgment foreclosing the property

under this section, if the property has not been transferred under

section 78m to a person other than the foreclosing governmental

unit, a foreclosing governmental unit may cancel the foreclosure by

recording with the register of deeds for the county in which the

property is located a certificate of error in a form prescribed by

the department of treasury, if the foreclosing governmental unit

discovers any of the following:

(a) The foreclosed property was not subject to taxation on the

date of the assessment of the unpaid taxes for which the property

was foreclosed.

(b) The description of the property used in the assessment of

the unpaid taxes for which the property was foreclosed was so

indefinite or erroneous that the forfeiture of the property was

void.

paid to the proper officer within the time provided under this act

for the payment of the taxes or the redemption of the property.

(d) A certificate, including a certificate issued under

section 135, or other written verification authorized by law was

issued by the proper officer within the time provided under this

act for the payment of the taxes for which the property was

foreclosed or for the redemption of the property.

(e) An owner of an interest in the property entitled to notice

under section 78i was not provided notice sufficient to satisfy the

minimum requirements of due process required under the state

constitution of 1963 and the constitution of the United States.

(f) A judgment of foreclosure was entered under this section

in violation of an order issued by a United States bankruptcy

court.

(10) A certificate of error submitted to the county register

of deeds for recording under subsection (9) need not be notarized

and may be authenticated by a digital signature of the foreclosing

governmental unit or by other electronic means.

Enacting section 1. This amendatory act applies only to

property foreclosed by a judgment of foreclosure entered pursuant

to section 78k(5) of the general property tax act, 1893 PA 206, MCL

211.78k, after the effective date of this amendatory act.