Montana lawmakers on both sides of the aisle are supporting a bill that would make it harder for investors and investment companies to buy homes for a fraction of their worth when a homeowner falls behind on property taxes.
Senate Bill 253 is a bipartisan bill sponsored by Sen. Cary Smith, R-Billings, and co-sponsored by Sen. Tom Jacobson, Democrat-Great Falls, who has worked on the bill for multiple sessions. After sailing through the Senate Judiciary Committee, it passed the third reading in the Senate on a 49-1 vote and will now be sent to the state House of Representatives.
Smith said current Montana law allows investors or other third-party purchasers to buy the deed to a home at far below market price if the homeowner is delinquent on property taxes over a certain amount of time.
When the homeowner gets evicted, they receive nothing for their property and can be left with significant debt, and Smith said the practice disproportionately affects low-income and elderly people. He believes it could also be challenged as unconstitutional.
Jacobson said he’s worked on the bill for four sessions.
“We had these companies coming in and getting tax liens and the notifications they were sending out (to homeowners) looked more like junk mail, purposely, so people would throw them away,” he said.
The Montana Association of Counties and the Montana County Treasurer’s Association oppose the bill because they say it creates too much work for their overburdened staff.
“We’re not here to make life easier for government officials, we’re protecting the homeowner," Smith told the Senate Judiciary Committee.
In 2016, the Great Falls Tribune chronicled the saga of an elderly man who lost a house valued at $139,300 to the Sunrise Financial Group investment company for $667.20. Smith said it’s newspaper reporting like that story that prompted him to support this bill.
“It doesn’t appear that this happens a lot but it happens enough that we should be concerned,” Smith told the Missoulian.
The bill would amend current Montana statute to allow for a two-step auction process to sell tax delinquent property. The first step would be a tax lien auction where the county treasurer recovers tax debt from investors who win the auction by providing the lowest interest rate to the property owner. The second step would occur after three years, if the debt hasn’t been paid off, the tax lien holder may ask the county to auction off the property to the highest bidder.
“The opening bid has to be at least half the value of the property the last time it was (appraised),” Smith explained. “If there’s anything left after the mortgage company is paid off, any money left can go to the property owner, which is not the case now.”
The proposed legislation would prohibit counties from selling tax liens on properties for delinquent taxes unless the amount due is over $1,000. Currently there is no minimum amount.
Jacobson included a provision that would allow counties to recoup the costs of holding the auctions.
“Good government should be about something more than just profits,” Jacobson said. “We should be doing everything we possibly can to help these people stay in their homes.”
The full text of the bill can be found online at https://legiscan.com/MT/text/SB253/2019.