TAX PAYMENT CERTIFICATION

PRIOR TO LAND DIVISION

House Bill 4055 (H-2) as reported from committee

Sponsor:  Rep. Bradley Slagh

1st Committee:  Local Government and Municipal Finance

2nd Committee:  Ways and Means

Complete to 3-12-19

BRIEF SUMMARY:  House Bill 4055 would amend the Land Division Act to require one or both of the following as a condition for approval of any proposed division of a parcel or tract of land under the act:

·         The payment of all property taxes and special assessments due on the parcel or tract.

·         The apportionment of unpaid property taxes and special assessments by the assessing officer overseeing the division.

FISCAL IMPACT:  To the extent that there are outstanding property taxes over the five preceding years on a parcel designated to be divided into smaller parcels and the parties chose the option of paying off unpaid property taxes or special assessments to facilitate the land division, there would presumably be an increase in state and local property tax revenue. Because the parcels to which the bill would apply cannot be identified, the impact on property tax revenue cannot be determined. The alternative option of apportioning unpaid property taxes and special assessments would result in an unknown fiscal impact on state and local property tax revenues.

               

THE APPARENT PROBLEM:

When selling a large parcel of land, sellers may desire to divide it to sell as smaller, separate parcels. If a lien on outstanding property taxes had been placed on the parcel of land prior to its subdivision and the smaller parcels are sold off, it can create confusion concerning who has responsibility for paying the outstanding taxes on the property, possibly resulting in those taxes never being paid or resulting in their payment by the purchasing party.

THE CONTENT OF THE BILL:

Section 109 of the Land Division Act currently requires that a local or county official who has authority to approve or disapprove a proposed division of land must approve a complete application for division if certain conditions are met, such as those concerning the size, shape, or accessibility of the resulting parcels. The bill would add that one of the two following conditions must also be met:

·         All property taxes and special assessments due on a soon-to-be-divided tract of land for the preceding five years must be paid, as established by a certificate from the treasurer of the county in which the parcel is located. If the date of the application is on or after March 1 of that year and before the treasurer of the local tax collecting unit has made his or her return of current delinquent taxes, then the county treasurer would have to include on his or her certificate a notation that the return of current delinquent taxes was not available for examination. The official with authority over the application for land division would be prohibited from disapproving any application due to the presence of such a notation on a certificate. The county treasurer would collect a certification fee of at least $5 for carrying out the examination process.

·         Alternatively, if the property taxes or special assessments due on the parcel or tract to be divided have not been paid, the unpaid property taxes or special assessments would have to be apportioned among the subdivided parcels or tracts by the township or city assessing officer overseeing the division. The apportioned property taxes or special assessments would be a lien against the apportioned parcels or tracts an would be treated in the same manner as property taxes and special assessments of the year of the original assessment for the purpose of collection and sale for delinquent taxes under the General Property Tax Act.

The bill would take effect 90 days after being enacted into law.

MCL 560.109

ARGUMENTS:

For:

Supporters of the bill argue that it will ensure that all property taxes on a parcel of land would be paid off prior to its subdivision, thus preventing any confusion or nonpayment of delinquent taxes and better facilitating the sale of subdivided land. They argue that the alternative provided by the bill would allow the sale of subdivided land if part of the intent of subdividing it and selling it in the first place were to pay off the delinquent taxes.

Against:

No arguments against the bill were offered in committee.

POSITIONS:

The following organizations indicated support for the bill (2-20-19):

            Michigan Association of County Treasurers

            Michigan Association of Realtors

            Michigan Association of Counties

            Michigan Townships Association

The Michigan Association of Register of Deeds indicated a neutral position regarding the bill. (2-20-19)

                                                                                         Legislative Analyst:   Nick Kelly

                                                                                                 Fiscal Analyst:   Jim Stansell

This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their deliberations and does not constitute an official statement of legislative intent.