An Act To Promote Fairness in Municipal Foreclosure Procedures
Maine Legislature, Session 123, LD 1710
Committee: Taxation
Sponsors: MILLS
Amends: 36 MRSA §949

Legislative Document 
No. 1710 
H.P.1193 
House of Representatives, March 23, 2007 
An Act To Promote Fairness in Municipal Foreclosure Procedures 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative MILLS of Farmington. 
Printed on recycled paper 
/rl~/h.~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 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 representative or a successor, heir or assign or a 
representative of that successor, heir or assign. 
2. 
Time and form of return; notice. 
Within 30 days of the disposition of 
residential real estate or 180 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; negotiation; failure to redeem. A municipality shall hold the excess of 
any funds for the benefit of the former owner in escrow in a segregated account for 90 
days or until the completion of negotiation, as required by this subsection, or arbitration, 
as required by subsection 4, whichever is later. Upon the request of the former owner 
within 90 days of the notice provided pursuant to subsection 2, the municipality shall 
enter into negotiations for the return of the excess funds. 
If the former owner is 
dissatisfied with the result of the negotiations, the former owner, within 30 days of 
negotiation, may seek arbitration as provided in subsection 4. If the former owner fails to 
appear personally within 90 days, the excess of any funds may be retained by the 
municipality. 
• 
4. Arbitration. The former owner, within 90 days of the notice provided pursuant to 
subsection 2 or 30 days of the negotiation with the municipality oursuant to subsection 3, 
may request that the controversy regarding the return of the excess of any funds be 
submitted to binding arbitration. The arbitration may be by one arbitrator, mutually 
agreed upon by the municipality and the former owner. If agreement cannot be reached, 
the arbitration must be submitted to a panel of 3 arbitrators, one of whom is selected by 
the former owner; one of whom is selected by the municipality; and one neutral arbitrator 
who is selected jointly by the other 2 arbitrators. 
Each party shall pay its chosen 
arbitrator and half of the cost of the neutral arbitrator. Determination of disputed matters 
by the panel of arbitrators is final and binding on the parties. The arbitration must be 
administered under the auspices of the American Arbitration Association or a successor 
organization and, except for the selection of arbitrators, is governed by the commercial 
rules and procedures of the American Arbitration Association. The concept of "last best 
offer" must be used. 
5. Failure to dispose of residential real estate. If a municipality does not dispose 
of residential 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. 
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 requires the municipality to provide notice of the availability of 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, to the 
former owner within 30 days of sale of the real estate or 180 days of the foreclosure, 
whichever is sooner. 
The municipality is required to keep the excess funds in a 
segregated escrow account. If the former owner fails to claim the excess funds within 90 
days of the notice, the municipality is allowed to retain the excess funds. If the former 
owner or the former owner's representative notifies the municipality within 90 days of 
the notice, the municipality must negotiate with the former owner over the return of the 
excess funds. If the owner is dissatisfied with the municipality's offer, the former owner 
may seek binding arbitration for resolution of the matter. 
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