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The Tax Forfeiture Process occurs as the result of uncollected property taxes. In order to put the process in context between delinquency and forfeiture, we begin at the period of time just before forfeiture occurs:
- If the property taxes are not paid in the year due, the taxes become delinquent as of January the following year.
- After notification to the taxpayer of record, the District Court enters judgment against the property. (It is important to remember that the unpaid taxes are a lien against the property, not a personal debt of the owner.)
- Judgment is entered as of May in the delinquent year.
The judgment date begins the “period of redemption.” Depending on ownership, use and location of the property, the period of redemption is one, three or five years from the judgment. Anytime during this period of redemption, the owner (or anyone else having an interest in the property) can pay the delinquent taxes and forfeiture will not occur.
If the property taxes remain unpaid after the statutory “expiration of redemption period”, the parcels will forfeit to the State. Once forfeited, title to the parcels is held by the State in trust for the local taxing districts. Counties are only agents of the State and their powers are only those which are prescribed by statute. The County’s main responsibility is to manage and maintain the inventory of properties by “encouraging the best use of the lands, recognizing that some lands in public ownership should be retained and managed for public benefits, while other lands should be returned to private ownership.”
The end goal of this process is to return the parcels of tax forfeited land to the property tax rolls as productive taxable property or put them to a public use or purpose. In either case, the responsibility for disposition of forfeited parcels lies with the County Auditor and the County Board, at which point the cycle will have been completed. (Taxable Status -> Delinquent Status -> Tax Forfeiture -> Back to Taxable Status or Public Use or Purpose)
The major tasks that occur as a result of forfeiture are:
- Remove the property from the tax rolls
- Cancel all real property tax and special assessment liens on the properties
- Classify the parcels of land:
- Conservation (stays in public ownership and not available for sale unless through special legislation) or
- Non-conservation (released for sale)
- Approve parcels for sale and establish appraised value
Tax Forfeited Properties are disposed of by the following methods:
- Re-convey a parcel to the prior owner under a repurchase agreement.
- Convey a parcel of tax forfeited land to a political subdivision free of charge for a public use. For Ramsey County, the law was expanded and it added two other circumstances whereby governmental units can acquire forfeited parcels:
- parcels located in a targeted neighborhood, and
- parcels acquired for a purpose authorized under MN Statutes, Chapter 469.
- Sell a parcel to a political subdivision or State agency for a public purpose.
- Sell a parcel to a third party at a public auction or private (adjacent owner) sale.
All revenues from the sale of tax forfeited land are deposited into a forfeited tax sale fund. The net revenue is distributed on an annual basis to the local taxing districts on the following percentage basis:
- 40% county,
- 40% school district
- 20% city
Information about Minnesota laws regarding delinquent taxes and tax forfeiture can be researched through the following statutes:
• Minnesota Statutes, Chapter 279, Delinquent Real Estate Taxes
• Minnesota Statutes, Chapter 280, Real Estate Tax Judgment Sales
• Minnesota Statutes, Chapter 281, Real Estate Tax Sales and Redemption
• Minnesota Statutes, Chapter 282, Tax-forfeited Land Sales
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