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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 August 9, 2024, a municipality must inform the former owner, using a form prepared by Maine Revenue Services, at least 90 days before the proposed sale;
  • The municipality must list the property with an independent real estate agent or broker;
  • The property must be sold at the best possible price at which the property is able to be sold within twelve months after listing;
  • A post-closure notice of intent to disburse proceeds must be provided to the former owner, or published, and any excess proceeds, after covering all costs, must be returned to the former owner; and
  • A notice shall be recorded in the registry of deeds confirming distribution of excess proceeds.

Receipt of excess proceeds by the former owner is deemed to be a waiver of any right of the former owner to commence a title action pursuant to 36 M.R.S. § 946-B.

What You Need to Know

Sold Home For Sale Sign in Front of New House

This article reflects the changes to the law as of August 9, 2024. This new version of the law replaces the one that went into effect on June 30, 2023. Further changes may be on the horizon, but for now, if your property is foreclosed on for unpaid taxes, it will be listed with a real estate broker, and any excess proceeds will be returned to you. 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.

Ready to take the next step? Connect with our dedicated team of attorneys who specialize in this area. They’re ready to offer you tailored, expert advice to meet your unique needs. Learn More.

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