An Act To Require the Net Proceeds from the Sale of a Foreclosed Property To Be Returned to the Former Owner
Maine Legislature, Session 122, LD 0626
Committee: Taxation
Sponsors: TWOMEY, BRYANT, EDER, GERZOFSKY, GLYNN, MARLEY, PERCY, RINES, SA VIELLO
Amends: 36 MRSA §949

Legislative Document 
No. 626 
H.P.459 
House of Representatives, February 8, 2005 
An Act To Require the Net Proceeds from the Sale of a Foreclosed 
Property To Be Returned to the Former Owner 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative TWOMEY of Biddeford. 
Cosponsored by Senator BRYANT of Oxford and 
'!r/~ 'frI. 71!dC~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: EDER of Portland, GERZOFSKY of Brunswick, GLYNN of South Portland, 
MARLEY of Portland, McKANE of Newcastle, PERCY of Phippsburg, RINES of Wiscasset, 
SA VIELLO of Wilton. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 36 MRSA §949 is enacted to read: 
§949. 
Disbursement of excess funds 
A municipality that obtains title to residential real estate 
under the operation of this article shall disburse to the former 
owner the excess of any funds as provided in this section. 
1. 
Definitions. 
As 
used 
in this 
section, 
unless 
the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Excess of any funds" means the amount obtained for the 
disposition of residential real estate less: 
(1) 
All tax liens 
imposed on the residential real 
estate by the municipality, including interest; 
(2) 
Fees for recordation and discharge of the lien, as 
established by Title 33, section 751, plus $13; 
( 3) The fee established in section 943 for sending a 
notice 
if 
the 
notice 
is 
actually 
sent, 
including 
certified mail, return receipt requested fees; 
(4) 
Any court costs; and 
( 5) 
All 
expenses 
incurred 
in 
disposing 
of 
the 
residential real estate. 
B. 
"Former owner" 
means 
a 
party named on the tax lien 
mortgage at the time of the levy of the tax lien or that 
party's successors, heirs or assigns. 
2. 
Time and form of return; notice. 
Within 30 days of the 
disposition 
of 
residential 
real 
estate 
or 
days 
of 
foreclosure, whichever is earlier, a municipality shall mail by 
certified maiL return receipt requested, to the former owner's 
last known address, 
notice of the excess of any funds. 
The 
notice must include an itemized statement showing the amount for 
which the real estate was sold and all deductions made from that 
amount. 
The 
notice 
also 
must 
include 
directions 
for 
the 
redemption of the excess of any funds, including the hours of the 
operation of the clerk of the municipality. 
3. 
Escrow; failure to redeem. 
A municipality shall hold 
the excess of any funds in escrow for 36 months for the benefit 
of the former owner. 
The municipality shall pay immediately the 
Page l-LR2054(l) 
excess of any funds upon the personal appearance of the former 
owner or a legal representative of the former owner. 
If the 
former owner or a legal representative of the former owner fails 
to appear personally within 36 months, the excess of any funds 
must be paid to the Treasurer of State to be credited to the 
General Fund until the excess of any funds becomes abandoned 
under the Uniform Unclaimed Property Act, at which point it must 
be reported and paid to the State in accordance with that Act. 
4. 
Failure to dispose of residential real estate. 
If a 
municipality does not dispose of residential real estate within 
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 
of 
the 
real 
estate. 
Notice 
of 
the 
availabili ty 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 
remi t the excess funds to the Treasurer of State for credit to 
the General Fund. 
This bill applies retroactively 
requiring any municipality that has 
lien foreclosure process since that 
funds to the former owners. 
to January 1, 
availed itself 
date to return 
2000, 
thus 
of the tax 
any excess