A bill that seeks to protect homeowners from tax lien foreclosure is expected to be voted on this week by the state House and Senate, and while Gov. Paul LePage, who initiated the bill, says it still has some problems, he thinks it’s headed in the right direction.
“It’s become a very good bill and it’s very important to the elderly,” he said.
The initial bill, An Act to Protect the Elderly from Tax Lien Foreclosure, was stripped during several work sessions by the Joint Standing Committee on Taxation, but a proposed amendment drafted in a compromise effort with input from Legal Services for the Elderly, Maine Municipal Association and Pine Tree Legal Assistance Inc., was passed unanimously last week by the taxation committee. The title of the bill changed to “An Act to Protect Homeowners from Tax Lien Foreclosure” as part of the amendment.
The bill requires that within 30 days after recording a tax lien certificate with the registry of deeds on a property owner who is receiving a homestead exemption, municipal officials must provide the owner written notice that he or she eligible for a tax abatement and, upon request, must help them to request an abatement.
The municipality also must provide information about the procedure for making such a request, according to the bill. It must let the property owner know that they may seek help from the state Department of Professional and Financial Regulation’s Bureau of Consumer Credit Protection about options for finding an advisor who can help them work with the municipality to avoid tax lien foreclosure. And contact information for the bureau must be provided.
After a foreclosure, according to the bill, a municipality must list a property with a licensed real estate broker who is not employed by the state or municipality, and the property must be sold at fair market value or the price at which the broker reasonably anticipates the property would sell for within six months after listing.
The listing and sale are contingent on several conditions: The property owner is receiving a property tax exemption as a homestead; is 65 or older; and has an income of less than $40,000 for the year before the year the property was foreclosed on. If the property owner is filing jointly with another person or persons, their combined income is less than $40,000; the property owner has liquid assets of less than $50,000 or, if there are two or more people filing a claim jointly, the combined liquid assets are less than $75,000.
The bill also says that if a municipality is unable to contract with a broker for the sale of the property or if he can not sell it within six months, it may be sold through the process used by a municipality to dispose of all other tax acquired property. Seventy-five percent of the net proceeds received from the sale must be paid to the former owner, with “net proceeds” defined as the sale price minus taxes owed, interest, fees including broker’s fees and other expenses incurred by the municipality or state tax assessor.
LePage initiated the bill after the town of Albion foreclosed on an elderly couple’s home on Lovejoy Pond and sold it in a sealed auction bid for $6,500 after a neighbor who came to the couple’s aid offered $6,000. LePage said the property was worth $70,000 to $80,000, and that equity they had built into their home was lost. The new owner evicted the couple, Richard and Leonette Sukeforth, who are in their 80s and now live in a nursing home.
In a public hearing and through three work sessions held over the last several weeks, taxation committee members debated the language in the bill, with some saying it would place an unfair burden on municipalities that already help elderly people with tax abatements if they request them, and some saying they did not think the state should interfere in the way municipalities sell properties.
Both sides — LePage and the Maine Municipal Association — still have concerns about parts of the bill. LePage says he is concerned about the $40,000 or less income figure for a property owner because he or she might have major medical bills exceeding income. LePage wants to ensure that a means test includes an assessment of medical bills and ability to pay taxes.
“I’m saying they’ve got to do a little bit more work there,” LePage said Friday in an interview.
The governor said he also is concerned about the part of the bill that says a municipality would sell a property through the process it uses to dispose of all other tax acquired property if it can not contract with a broker or the broker can not sell it within six months.
LePage says it must be an open, rather than a sealed, bid process to ensure transparency. A municipality should accept reasonable offers, and there should be no incentive to hold on to the property to auction it later by sealed bid, according to LePage. Listing it with a broker, he said, would ensure it is on all real estate search engines and would have high visibility.
Sen. Dana Dow, R-Waldoboro, chairman of the taxation committee, and committee member Rep. Gay Grant, D-Gardiner, did not return calls seeking commen. Contacted on Monday, Maine Municipal Association Executive Director Stephen Gove said in an email that he believes the association’s legislative bulletin published Friday answers questions about the association’s position on the amended bill.
Regarding the post-foreclosure process the bill spells out, the bulletin targets the owner’s personal responsibility: Although the amended version of the bill includes many of the provisions the association “and other interest groups advanced to the (taxation) committee in the spirit of compromise, the element retaining the last bastion of personal responsibility was excluded. As a result, the committee’s amendment requires that 100 percent of the sales revenue, less the costs incurred by the municipality to manage and dispose of the property, back taxes, interests and fees, be returned to the previous owner.”
MMA had negotiated an amendment that would have required 75 percent of the net sales revenue to be returned to the former owner with the purpose of “retaining some of the sales revenue to balance the interest and investments of the former owner with the interest of all other property taxpayers called upon to pick up the delinquent home owner’s property tax tab.”
But the amended bill has a “silver lining,” according to the association bulletin: The committee was willing to fund most of new municipal costs required by the bill.
“As provided in current law, the Legislature must either fund 90 percent of newly mandated costs or shift 100 percent of those costs to municipalities by a two-thirds majority vote in both the House and Senate. Failure of the Legislature to fund or override its financial obligation would render the municipal implementation of the newly adopted requirements an option, rather than a mandate.”
LePage, meanwhile, says he is pleased the bill has improved significantly from when it was stripped, and he will not give up on trying to make further changes to the bill on the floor.
“I think this is as important, if not more important, than paying hospitals off,” he said.
Amy Calder — 861-9247
Twitter: @AmyCalder17
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