In a recent groundbreaking Supreme Court decision, there’s been a significant shift in how municipalities handle the proceeds from the sale of property due to unpaid taxes. This ruling has a profound impact on Maine, where municipalities were previously allowed to keep proceeds from such sales. Let’s delve into what this means for property owners like you.
The Supreme Court Ruling: Tyler v. Hennepin County
The Supreme Court decision in Tyler v. Hennepin County has introduced a new rule: if your property is sold because of unpaid taxes, you now have the opportunity to reclaim any extra money from the sale.
How Tax Foreclosures Work in Maine
Before we dive into the recent changes, it’s crucial to understand the basics of tax foreclosures in Maine. If you fall behind on paying your property taxes, the municipality can place a lien on your property. If the taxes are not paid within 18 months of the lien being recorded, and the municipality has complied with notice requirements, the municipality will automatically foreclose on the property. Prior to the recent rule change, municipalities could dispose of the property as they saw fit and keep any proceeds from a sale after payment of unpaid taxes and other costs.
What’s Changing for Maine Municipalities
Due to the Supreme Court decision in Tyler v. Hennepin County, Maine had to revamp how they handle the sale of tax-foreclosed properties. The new law can be found at 36 M.R.S. §943-C, and outlines the following changes:
- Effective June 30, 2023, if a municipality intends to sell tax foreclosed property to someone other than the former owner, they must inform the former owner, using a form prepared by Maine Revenue Services, at least 90 days before the proposed sale.
- The former owner has the right to require the property be listed with a real estate broker under the new law. If the former owner chooses to exercise this right, the municipality must use an independent real estate broker to list the property for sale.
- The property must be sold at the best possible price or the price the broker anticipates the property will sell for within six months.
- Any excess proceeds after covering all costs must be returned to the former owner.
If the former owner decides not to exercise their right, or the property doesn’t sell within 6 months, the municipality can sell the property as they see fit. However, the municipality is still obligated to return any excess proceeds to the former owner. A municipality may require the former owner to sign a quitclaim deed in exchange for the excess proceeds.
What You Need to Know
This change is a significant development in how Maine handles tax-foreclosed properties. The new law is still fresh, and there may be some minor adjustments as municipalities start implementing it. For now, if your property is foreclosed on for unpaid taxes, you have the right to request it be listed with a real estate broker, and any excess proceeds will be returned to you, possibly upon the requirement that you sign a quitclaim deed to the municipality. If you’re concerned about how these changes might impact you, seeking advice from legal experts is a prudent step. They can provide guidance tailored to your specific situation, ensuring you navigate these adjustments with confidence.
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