SF 4985

2nd Engrossment - 93rd Legislature (2023 - 2024) Posted on 05/10/2024 09:25am

A bill for an act
relating to taxation; property; modifying distribution of excess proceeds from sales
of tax-forfeited property; appropriating money; amending Minnesota Statutes
2022, sections 281.23, subdivision 2; 282.01, subdivision 6; 282.241, subdivision
1; 282.301; proposing coding for new law in Minnesota Statutes, chapter 282.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 281.23, subdivision 2, is amended to read:

Subd. 2.

Form.

The notice of expiration of redemption must contain the tax parcel
identification numbers and legal descriptions of parcels subject to notice of expiration of
redemption provisions prescribed under subdivision 1. The notice must also indicate the
names of taxpayers and fee owners of record in the office of the county auditor at the time
the notice is prepared and names of those parties who have filed their addresses according
to section 276.041 and the amount of payment necessary to redeem as of the date of the
notice. At the option of the county auditor, the current filed addresses of affected persons
may be included on the notice. The notice is sufficient if substantially in the following form:

"NOTICE OF EXPIRATION OF REDEMPTION

Office of the County Auditor

County of ......................., State of Minnesota.

To all persons having an interest in lands described in this notice:

You are notified that the parcels of land described in this notice and located in the county
of ................................, state of Minnesota, are subject to forfeiture to the state of Minnesota
because of nonpayment of delinquent property taxes, special assessments, penalties, interest,
and costs levied on those parcels. The time for redemption from forfeiture expires if a
redemption is not made by the later of (1) 60 days after service of this notice on all persons
having an interest in the lands of record at the office of the county recorder or registrar of
titles, or (2) by the second Monday in May. The redemption must be made in my office.

new text begin IMPORTANT: If the parcels forfeit, they will be sold. If the proceeds from the sale
exceed the total amount of the delinquent taxes, special assessments, penalties, interest, and
costs levied on those parcels, you may be entitled to the excess proceeds from the sale. If
there are excess proceeds, you will be notified and must submit the claim form included
with the notification in order to receive the proceeds.
new text end

Names (and Current Filed Addresses) for the Taxpayers and Fee Owners and Those Parties Who Have Filed Their Addresses Pursuant to section 276.041		Legal Description		Tax Parcel Number		Amount Necessary to Redeem as of Date of Notice
.		.		.		.
.		.		.		.

FAILURE TO REDEEM THE LANDS PRIOR TO THE EXPIRATION

OF REDEMPTION WILL RESULT IN THE LOSS OF THE LAND AND

FORFEITURE TO THE STATE OF MINNESOTA.

Inquiries as to these proceedings can be made to the County Auditor for ............... County,
whose address is set forth below.

Witness my hand and official seal this ............................ day of ................, .......

		.
		County Auditor
	(OFFICIAL SEAL)
		.
		(Address)
		.
		(Telephone)."

The notice must be posted by the auditor in the auditor's office, subject to public
inspection, and must remain so posted until at least one week after the date of the last
publication of notice, as provided in this section. Proof of posting must be made by the
certificate of the auditor, filed in the auditor's office.

Sec. 2.

new text begin [282.005] TAX-FORFEITED LAND; INITIAL SALE.
new text end

new text begin Subdivision 1. new text end

new text begin Public auction required. new text end

new text begin Prior to managing tax-forfeited lands as
otherwise provided in this chapter, a county must first offer tax-forfeited parcels for sale
pursuant to this section, except that any interests in iron-bearing stockpiles, minerals, or
mineral interests are reserved for the state as provided under subdivision 8, and any parcel
withdrawn from sale by the commissioner of natural resources under section 282.007 must
be managed as provided in section 282.007. If a property cannot be sold under this section
for more than the minimum bid, the state is deemed to have purchased the property through
a credit bid and the parcels may be disposed of as otherwise provided in this chapter.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For the purposes of this section, the following terms have the
meanings given:
new text end

new text begin (1) "interested party" means any party with an interest in the real estate including but
not limited to an owner of the property, a lienholder, or any other party who has filed their
name according to section 276.041;
new text end

new text begin (2) "mineral interest" means an interest in any minerals, including but not limited to
iron, gas, coal, oil, copper, gold, or other valuable minerals; and
new text end

new text begin (3) "minimum bid" means the sum of delinquent taxes, special assessments, penalties,
interests, and costs assigned to the parcel.
new text end

new text begin Subd. 3. new text end

new text begin Repurchase. new text end

new text begin Prior to the public sale required under this section, an interested
party may repurchase the property by payment of the sum of all delinquent taxes and
assessments computed under section 282.251, together with penalties, interest, and costs,
that accrued or would have accrued if the parcel of land had not forfeited. A property
repurchased under this subdivision is no longer subject to the requirements of this section.
All rights and interests of all interested parties remain unaffected if a property is repurchased
under this subdivision.
new text end

new text begin Subd. 4. new text end

new text begin Public auction. new text end

new text begin (a) The county auditor must sell the property at a public auction
to the highest bidder in a manner reasonably calculated to facilitate public participation,
including by online auction. The sale must occur within six months of either the filing of
the certificate of the expiration of redemption pursuant to section 281.23, subdivision 9, or
the date the property is vacated by the occupant, whichever is later. Notice of the sale must
be provided by website publication at least 30 days before the commencement of the sale.
new text end

new text begin (b) At auction, the county auditor must calculate the minimum bid and make the figure
available to those participating in the auction. If no buyer is willing to pay the minimum
bid, the state is deemed to have purchased the property through a credit bid and the parcels
may be disposed of as otherwise provided in this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Sale proceeds. new text end

new text begin The auction proceeds must be collected by the county auditor.
The amount of the minimum bid shall be deposited into a county's forfeited tax sale fund.
The proceeds in excess of the minimum bid shall be available for distribution pursuant to
subdivision 6.
new text end

new text begin Subd. 6. new text end

new text begin Claims for surplus proceeds. new text end

new text begin (a) If a sale under this section results in a surplus,
within 60 days of the sale, the county auditor must notify interested parties, in a manner
described in subdivision 7, of the surplus by sending notice of the surplus and a claim form
to the interested parties. The commissioner of revenue must prescribe the form and manner
of the claim form. The notice must indicate that the sale of the property resulted in a surplus,
the amount of the surplus, that parties with an interest in the property are entitled to the
surplus amount, and that interested parties have an obligation to submit a claim for the
surplus. Interested parties are entitled to make a claim for surplus proceeds under this
subdivision if they file a claim within six months from the date the notice is first mailed to
the interested parties.
new text end

new text begin (b) Unless disputed by the county auditor, if a single claim is filed, the county auditor
must pay the surplus to the interested party filing the claim. A county must not pay any
claimant until after the period of time in which to file a claim has expired.
new text end

new text begin (c) If there are multiple claims for a given property, the county must divide payments
under this subdivision among the claimants according to each claimant's interest in proportion
to the interest of all claimants. If the county auditor disputes a claim, or if there is a dispute
as to how to divide the surplus among multiple claimants, the county auditor may deposit
the surplus funds in district court and file a petition pursuant to Rule 67 of the Minnesota
Rules of Civil Procedure, asking the court to determine claimants' rights to the funds
deposited. The county auditor is entitled to recover the costs it reasonably incurs in
commencing and maintaining this action from the amount of funds submitted to the court
in the action. If the court determines that no claimant is entitled to the surplus, the surplus
must be returned to the county and deposited into the county's forfeited tax sale fund.
new text end

new text begin (d) The county and the county auditor are entitled to absolute immunity related to any
claim predicated on distribution of surplus if the county auditor distributed proceeds
consistent with this subdivision.
new text end

new text begin Subd. 7. new text end

new text begin Manner of service. new text end

new text begin (a) A notice provided under subdivision 6 or 8 must be
served as follows:
new text end

new text begin (1) by certified mail to all interested parties of record within 60 days of the sale;
new text end

new text begin (2) if an interested party of record has not filed a claim, a second notice must be sent by
first class mail to all interested parties between 90 and 120 days after the sale;
new text end

new text begin (3) unless the property is vacant land, within 60 days of the sale, by first class mail to
the property addressed to the attention of the occupants of the property; and
new text end

new text begin (4) within 60 days of the sale, by publishing a list of property sales with surplus with
unexpired claims periods to the county's website.
new text end

new text begin (b) In addition, solely at the discretion of the county, the summons may be published in
the county's designated newspaper for publication of required public notices.
new text end

new text begin Subd. 8. new text end

new text begin Claims for mineral interests; payments; appropriation. new text end

new text begin (a) Upon forfeiture,
any iron-bearing stockpiles, minerals, and mineral interests shall be sold to the state for $50.
The county auditor must notify interested parties within 60 days of the sale by sending
notice and a claim form. The commissioner of revenue must prescribe the form and manner
of the claim form. Notice must be provided in a manner described in subdivision 7. An
interested party may submit a claim alleging that the value of the iron-bearing stockpiles,
minerals, or mineral interests in the property exceeds the minimum bid. Claims must be
submitted within six months from the date the notice under this subdivision is first mailed
to the interested parties.
new text end

new text begin (b) If a claim is filed under this subdivision, the commissioner of natural resources must
determine the value of the forfeited iron-bearing stockpiles, minerals, and mineral interests.
If the value of the iron-bearing stockpiles, minerals, and mineral interests does not exceed
the minimum bid, the claimant is not entitled to any payment under this subdivision. If the
value of the iron-bearing stockpiles, minerals, and mineral interests exceeds the minimum
bid, the claimant is entitled to a payment from the commissioner of natural resources equal
to this excess amount.
new text end

new text begin (c) If there are multiple claims, the county must divide payments under this subdivision
among the claimants according to each claimant's ownership interest in proportion to the
ownership interest of all claimants. If the county auditor disputes a claim, or if there is a
dispute as to how to divide the surplus among multiple claimants, the commissioner of
natural resources must transfer the amount due to the claimants under this subdivision to
the county auditor. The county auditor must then deposit the transferred amount in district
court and file a petition pursuant to Rule 67 of the Minnesota Rules of Civil Procedure,
asking the court to determine claimants' rights to the funds deposited. The county auditor
is entitled to recover the costs it reasonably incurs in commencing and maintaining this
action from the amount of funds submitted to the court in the action. If the court determines
that no party that filed a claim is entitled to the surplus, the payment must be returned to
the commissioner of natural resources and is canceled to the general fund.
new text end

new text begin (d) An amount necessary to make payments under this subdivision is annually
appropriated from the general fund to the commissioner of natural resources.
new text end

new text begin Subd. 9. new text end

new text begin Expiration of surplus. new text end

new text begin If a sale under this section results in a surplus and either
(1) no interested party makes a claim for the proceeds within the time allowed under
subdivision 6, or (2) it is determined that no claimant was entitled to the surplus proceeds,
then interested parties are no longer eligible to receive payment of any surplus. Once
interested parties are no longer eligible to receive payment of any surplus, the proceeds
must be returned to the county's forfeited tax sale fund.
new text end

new text begin Subd. 10. new text end

new text begin Rights affected by forfeiture. new text end

new text begin The forfeiture of the property extinguishes all
liens, claims, and encumbrances other than:
new text end

new text begin (1) the rights of interested parties to surplus proceeds under this section;
new text end

new text begin (2) rights of redemption provided under federal law;
new text end

new text begin (3) easements and rights-of-way holders who are not interested parties; and
new text end

new text begin (4) benefits or burdens of any real covenants filed of record as of the date of forfeiture.
new text end

new text begin Subd. 11. new text end

new text begin Property bought by the state. new text end

new text begin Property deemed to be purchased by the state
pursuant to this section shall be held in trust for the benefit of the taxing districts. All land
becoming property of the state pursuant to this chapter shall be managed in accordance with
chapters 93 and 282 and other applicable law.
new text end

Sec. 3.

new text begin [282.007] LAND WITHDRAWN FROM INITIAL SALE.
new text end

new text begin Subdivision 1. new text end

new text begin Property withdrawn from sale. new text end

new text begin The commissioner of natural resources
may withhold or withdraw from the sale required under section 282.005 any property allowed
to be withheld or withdrawn from sale in section 85.012, 85.013, 282.01, subdivision 8, or
282.018. The commissioner of natural resources must condemn parcels withheld or
withdrawn from sale under this section according to procedures set forth in chapter 117.
Notwithstanding section 282.005, subdivision 1, any interests in iron-bearing stockpiles,
minerals, or mineral interests in property withheld or withdrawn from sale under this section
are not severed from the property and are not subject to section 282.005, subdivision 8.
new text end

new text begin Subd. 2. new text end

new text begin Notice. new text end

new text begin The county auditor must provide notice to the commissioner of natural
resources of the forfeiture of any lands eligible to be withheld or withdrawn from sale under
this section. Notice must be provided within 30 days of either the filing of the certificate of
the expiration of redemption pursuant to section 281.23, subdivision 9, or the date the
property is vacated by the occupant, whichever is later. Within 30 days of this notice, the
commissioner of natural resources must notify the county auditor of a decision to withhold
or withdraw a property from the sale under section 282.005. If no such notice is given, the
county auditor must sell the property pursuant to section 282.005.
new text end

new text begin Subd. 3. new text end

new text begin Repurchase. new text end

new text begin Prior to the initiation of the condemnation proceedings of a
property withheld or withdrawn from sale under this section, an interested party may
repurchase the property by payment of the sum of all delinquent taxes and assessments
computed under section 282.251, together with penalties, interest, and costs that accrued
or would have accrued if the parcel of land had not forfeited. The county auditor must notify
the commissioner of natural resources if a property is repurchased under this subdivision.
A property repurchased under this subdivision is no longer subject to the requirements of
this section or section 282.005. All rights and interests of all interested parties remain
unaffected if a property is repurchased under this subdivision. For the purposes of this
section, "interested party" has the meaning given in section 282.005, subdivision 2.
new text end

new text begin Subd. 4. new text end

new text begin Proceeds. new text end

new text begin Notwithstanding any law to the contrary in chapter 117, all proceeds
from the condemnation proceedings of a property withheld or withdrawn from sale under
this section must be transferred from the commissioner of natural resources to the county
auditor. Any proceeds up to the value of the minimum bid are transferred to the county's
forfeited tax sale fund. Any proceeds in excess of the minimum bid must be made available
for claims pursuant to section 282.005, subdivision 6. For the purposes of this section,
"minimum bid" has the meaning given in section 282.005, subdivision 2.
new text end

Sec. 4.

Minnesota Statutes 2022, section 282.01, subdivision 6, is amended to read:

Subd. 6.

Duties of commissioner after sale.

(a) When any sale has been made by the
county auditor under sections deleted text begin 282.01 deleted text end new text begin 282.005 new text end to 282.13, the auditor shall immediately
certify to the commissioner of revenue such information relating to such sale, on such forms
as the commissioner of revenue may prescribe as will enable the commissioner of revenue
to prepare an appropriate deed if the sale is for cash, or keep necessary records if the sale
is on terms; and not later than October 31 of each year the county auditor shall submit to
the commissioner of revenue a statement of all instances wherein any payment of principal,
interest, or current taxes on lands held under certificate, due or to be paid during the preceding
calendar years, are still outstanding at the time such certificate is made. When such statement
shows that a purchaser or the purchaser's assignee is in default, the commissioner of revenue
may instruct the county board of the county in which the land is located to cancel said
certificate of sale in the manner provided by subdivision 5, provided that upon
recommendation of the county board, and where the circumstances are such that the
commissioner of revenue after investigation is satisfied that the purchaser has made every
effort reasonable to make payment of both the annual installment and said taxes, and that
there has been no willful neglect on the part of the purchaser in meeting these obligations,
then the commissioner of revenue may extend the time for the payment for such period as
the commissioner may deem warranted, not to exceed one year. On payment in full of the
purchase price, appropriate conveyance in fee, in such form as may be prescribed by the
attorney general, shall be issued by the commissioner of revenue, which conveyance must
be recorded by the county and shall have the force and effect of a patent from the state
subject to easements and restrictions of record at the date of the tax judgment sale, including,
but without limitation, permits for telephone and electric power lines either by underground
cable or conduit or otherwise, sewer and water lines, highways, railroads, and pipe lines for
gas, liquids, or solids in suspension.

(b) The commissioner of revenue shall issue an appropriate conveyance in fee when
approval from the county auditor is given based upon written confirmation from a licensed
closing agent, title insurer, or title insurance agent as specified in section 82.641. For purposes
of this paragraph, "written confirmation" means a written commitment or approval that the
funding for the conveyance is held in an escrow account available for disbursement upon
delivery of a conveyance. The county recorder or registrar of titles must not record or file
a conveyance issued under this paragraph unless the conveyance contains a certification
signed by the county auditor where the land is located stating that the recorder or registrar
of titles can accept the conveyance for recording or filing. The conveyance issued by the
commissioner of revenue shall not be effective as a conveyance until it is recorded. The
conveyance shall be issued to the county auditor where the land is located. Upon receipt of
the conveyance, the county auditor shall hold the conveyance until the conveyance is
requested from a licensed closing agent, title insurer, or title insurance agent to settle and
close on the conveyance. If a request for the conveyance is not made within 30 days of the
date the conveyance is issued by the commissioner of revenue, the county auditor shall
return the conveyance to the commissioner. If the conveyance is delivered to the licensed
closing agent, title insurer, or title insurance agent and the closing does not occur within
ten days of the request, the licensed closing agent, title insurer, or title insurance agent shall
immediately return the conveyance to the county auditor and, upon receipt, the county
auditor shall return the conveyance to the commissioner of revenue. The commissioner of
revenue shall cancel and destroy all conveyances returned by the county auditor pursuant
to this subdivision. The licensed closing agent, title insurer, or title insurance agent must
promptly record the conveyance after the closing and must deliver an attested or certified
copy to the county auditor and to the grantee or grantees named on the conveyance.

Sec. 5.

Minnesota Statutes 2022, section 282.241, subdivision 1, is amended to read:

Subdivision 1.

Repurchase requirements.

The owner at the time of forfeiture, or the
owner's heirs, devisees, or representatives, or any person to whom the right to pay taxes
was given by statute, mortgage, or other agreement, may repurchase any parcel of land
claimed by the state to be forfeited to the state for taxes unless before the time repurchase
is made the parcel is sold under installment payments, or otherwise, by the state as provided
by law, or is under mineral prospecting permit or lease, or proceedings have been commenced
by the state or any of its political subdivisions or by the United States to condemn the parcel
of land. The parcel of land may be repurchased for the sum of all delinquent taxes and
assessments computed under section 282.251, together with penalties, interest, and costs,
that accrued or would have accrued if the parcel of land had not forfeited to the state. Except
for property which was homesteaded on the date of forfeiture, repurchase is permitted during
six months only from the date of forfeiture, and in any case only after the adoption of a
resolution by the board of county commissioners determining that by repurchase undue
hardship or injustice resulting from the forfeiture will be corrected, or that permitting the
repurchase will promote the use of the lands that will best serve the public interest. If the
county board has good cause to believe that a repurchase installment payment plan for a
particular parcel is unnecessary and not in the public interest, the county board may require
as a condition of repurchase that the entire repurchase price be paid at the time of repurchase.
A repurchase is subject to any easement, lease, or other encumbrance granted by the state
before the repurchase, and if the land is located within a restricted area established by any
county under Laws 1939, chapter 340, the repurchase must not be permitted unless the
resolution approving the repurchase is adopted by the unanimous vote of the board of county
commissioners. new text begin Notwithstanding the foregoing, any application to repurchase a property
that is made available for sale pursuant to section 282.005 must be made before the date of
that sale.
new text end

The person seeking to repurchase under this section shall pay all maintenance costs
incurred by the county auditor during the time the property was tax-forfeited.

Sec. 6.

Minnesota Statutes 2022, section 282.301, is amended to read:

282.301 RECEIPTS FOR PAYMENTS; CERTIFICATION BY COUNTY
AUDITOR.

When any sale has been made under sections new text begin 282.005, new text end 282.012 new text begin , new text end and 282.241 to 282.324,
the purchaser shall receive from the county auditor at the time of repurchase a receipt, in
such form as may be prescribed by the attorney general. When the purchase price of a parcel
of land shall be paid in full, the following facts shall be certified by the county auditor to
the commissioner of revenue of the state of Minnesota: the description of land and the date
when the final installment of the purchase price was paid.

Sec. 7. new text begin DEPARTMENT OF NATURAL RESOURCES; APPROPRIATION.
new text end

new text begin $1,537,000 in fiscal year 2025 is appropriated from the general fund to the commissioner
of natural resources to perform the duties required under Minnesota Statutes, section 282.005.
The base for this appropriation is $1,537,000 in fiscal year 2026 and each fiscal year
thereafter.
new text end

Sec. 8. new text begin EFFECTIVE DATE.
new text end

new text begin Section 1 is effective for notices provided after the day following final enactment.
Sections 2 to 6 are effective for forfeitures occurring after December 31, 2023.
new text end