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Bill would allow banks to foreclose family‑transfer lots despite two‑year conveyance limit
Summary
House Bill 520 would exempt foreclosure sales from the two‑year nonconveyance restriction on family transfer lots so lenders can take collateral and make loans to buyers of family‑transferred parcels, proponents told the committee.
Representative Larry Brewster presented House Bill 520 to the committee as a narrowly tailored amendment to Montana’s family‑transfer rules. The bill would add exceptions allowing an immediate family member who receives a division of land to have that parcel pledged as collateral and to allow foreclosure sales despite the usual two‑year nonconveyance period.
Sam Sill, representing the Montana Bankers Association, said lenders sometimes must decline otherwise sound loans because a family‑transferred lot cannot be conveyed or foreclosed under the existing two‑year restriction. “If the lot can’t be conveyed to anybody, that means if they don’t pay the mortgage, the bank can’t foreclose,” Sill said. He said the change simply removes the lenders’ practical barrier while leaving the basic family‑transfer structure intact.
Karen Alley of the Montana Association of Counties said the statutory holding period can prevent recipients from using a lot to finance a home; county regulators and lenders need the ability to use the parcel as collateral to permit expected development of the lot. Committee members asked why the two‑year period was set; witnesses said the limit was chosen during earlier legislation (Senate Bill 158) to standardize a range of county practices.
No opponents were listed in the hearing record and the committee closed the hearing after the sponsor’s closing remarks.
