Council authorizes manager to negotiate settlement to refund surplus proceeds from 16 Fifth Street sale
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Summary
Following legal review, the council authorized the city manager to negotiate and execute a settlement to return surplus proceeds from the 16 Fifth Street foreclosure sale in accordance with state statute, conditional on obtaining a full release of claims and clearing title.
The Ellsworth City Council authorized the city manager to negotiate and execute a settlement to return surplus proceeds from the foreclosure and subsequent auction of 16 Fifth Street, provided the city secures a full release of claims and the property's title remains clear.
Councilors said staff and city attorneys performed an extensive legal review after the Maine Supreme Court issued guidance and the Legislature amended municipal tax-title laws. City Attorney Tim Pease summarized the statutory background and recommended a settlement approach that would limit the city’s future liability while following the state’s definition of surplus proceeds.
Councilors discussed the competing priorities: correcting a perceived injustice by returning surplus proceeds to the prior owner’s estate and protecting municipal finances from wider exposure to claims on other sales. Several residents urged the council to return the net proceeds; others asked for careful legal safeguards to avoid opening the city to larger liabilities.
The motion the council adopted directed the manager to execute a settlement that refunds surplus proceeds as set out by the applicable state statute (cited during the meeting as Title 36 guidance) plus applicable interest, subject to a full release of claims arising from the foreclosure and to assurances that title remains marketable. Councilors recorded the vote in favor and directed staff to proceed with negotiations.
