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Hearing on HB 420: sponsors seek to close tax‑foreclosure "equity stripping" loophole; county treasurers warn of operational and fiscal impacts
Summary
Representative Carrie Seakins Crowe says HB 420 would close a loophole allowing governments or assignees to keep more than owed after tax foreclosures on nonresidential property, citing the Supreme Court Tyler decision; county treasurers and title industry opponents urged extensive technical amendments to address valuation math, redemption periods and auction/notice costs.
Representative Carrie Seakins Crowe opened House Bill 420 as legislation to "end equity theft in Montana," saying state law currently allows uncompensated takings on some nonresidential properties and that the U.S. Supreme Court's Tyler decision supports reform. She said the bill would ensure constitutional just compensation where governments or third parties foreclose tax liens and claim excess proceeds.
Civil liberties and property‑rights groups testified in favor. Henry Seaton of the ACLU of Montana framed the bill as protecting the Fifth Amendment and vulnerable Montanans facing foreclosure; Jim Manley of Pacific Legal Foundation said PLF litigated the relevant case and urged protection of all property, residential and nonresidential.
County treasurers, title companies and tax‑lien holders raised detailed operational and fiscal objections. Rebecca Myers and Terry Kunz said HB 420, as drafted, creates conflicts with existing statutes governing real versus personal property, would impose onerous new notice and auction requirements (including online real‑time bidding), extend redemption from three to five years in ways that could increase taxpayer costs, and introduce a 2% fair‑market‑value threshold that may not work with current valuation cycles. They urged more time to apply recent reforms from House Bill 23 and requested collaborative amendments.
Title industry and tax‑lien representatives warned the bill could create legal inconsistencies and unintended consequences for mobile homes and multifamily dwellings, said the 2% valuation math is problematic in practice and suggested referencing established foreclosure frameworks such as the small tract financing act.
Sponsor Seakins Crowe acknowledged the concerns, committed to working with county treasurers, title companies and other stakeholders on technical fixes, and asked the committee for patience as amendments are drafted. The committee took no final action.
