4.__Failure to dispose of real estate.__If the municipality does not dispose of the real estate within 180 days of foreclosure, the excess of any funds is determined by subtracting from the fair market value of the real estate at the time of foreclosure, as determined by an independent appraisal, the costs specified in subsection 1, paragraph A and the cost of the appraisal performed pursuant to this subsection.

Sec. 2. Retroactivity. This Act applies retroactively to January 1, 2000.

SUMMARY

Under current law, if a municipality forecloses on a parcel of real estate for failure to pay taxes owed on that real estate, the municipality is under no obligation to return any funds that exceed the amount owed in taxes after the sale of the property.

This bill, modeled on the foreclosure proceedings initiated by a mortgagee, requires a municipality that forecloses on residential real estate to return the excess funds, after subtracting the tax lien, interest, fees for recording the lien, costs of mailing notice, court costs and any other expenses incurred in disposing the real estate. Notice of the availability of the excess funds must be provided to the former owner within 30 days of sale of the real estate or 180 days of the foreclosure, whichever is sooner. If the former owner fails to claim the excess funds within 36 months, the municipality must remit the excess funds to the Treasurer of State for credit to the General Fund.

This bill applies retroactively to January 1, 2000, thus requiring any municipality that has availed itself of the tax lien foreclosure process since that date to return any excess funds to the former owner.