When should the examiner consider title to be encumbered by a municipal real estate tax lien recorded pursuant to 36 M.R.S.A. Section 942?

RECOMMENDATION:

1. If the tax lien is undischarged and has been recorded 18 months or less, a discharge should be obtained and recorded. As long as there is record evidence of the payment of the taxes within the 18-month period of redemption established by Section 943, the title will be unencumbered by the lien even if the discharge is recorded after the 18-month period.
   
   
2. If the tax lien is undischarged and has been recorded more than 18 months but inquiry shows that the taxes were in fact paid within 18 months after the lien was recorded, then a discharge indicating that payment of taxes was received within the 18-month period of redemption should be obtained and recorded to correct the municipal treasurer’s oversight. If the tax lien is undischarged and has been recorded more than 18 months and the taxes have not been paid within those 18 months, a deed from the municipality should be obtained and recorded, unless the tax lien has been effectively discharged by operation of the tenth, unnumbered, paragraph of Section 943, as described in Recommendation C, below, or can be discharged as described in Recommendation D and the Discussion below. Of course, the lien may be simply invalid, as described in the Discussion below.
   
   
3. After October 1, 1935, if a discharge is given after the right of redemption has expired, and the discharge has been recorded for more than a year, then the discharge is effective to release the municipality’s interest in the property derived from the tax lien described in the discharge and from all other tax liens for which the redemption period had expired more than ten years prior to the foreclosure date of the tax lien described in the discharge, unless the municipality had conveyed any interest in the property based on its title acquired from any of the undischarged tax liens prior to one year after the discharge is recorded. See the tenth, unnumbered, paragraph of Section 943.
   
   
4. If evidence of certain facts or events is recorded in the Registry of Deeds, a tax lien discharge recorded after the expiration of the 18 month redemption period may be considered effective to remove the encumbrance of the lien if the examiner is satisfied that one or more of the relevant laws, described in the Discussion below, are indeed applicable and if the record evidences that payment was received within the enlarged redemption period.

DISCUSSION:

See Section 943, the third paragraph, which speaks of payment as the critical event. Accordingly, the date of recording of the discharge is not material, nor is the date of acknowledgment.

The tenth paragraph of 36 M.R.S.A. Section 943 was limited to cases where the municipality has not conveyed its lien-acquired interest, by P.L. 1989, c. 766, effective July 10, 1990, and was made retroactive to October 1, 1935 by P.L. 1991, c. 245, Section 2.

Section 943 enlarges the time for redemption for certain parties if the appropriate municipal official does not give the notice of assessment and demand for payment required by Section 942 or the notice of impending foreclosure required by Section 943 at the times they should ordinarily be given. (See the fifth and seventh, unnumbered, paragraphs of Section 943.) Also, by operation of federal bankruptcy law and of the Servicemembers Civil Relief Act (SCRA), the municipal treasurer often is barred from giving the notice of impending foreclosure at the time it should ordinarily be given, but the treasurer will give the notice thereafter and the party entitled to the notice who pays within the special thirty day period authorized by Section 943 is entitled to a discharge. Moreover, Section 943 authorizes a court in certain probate proceedings to extend the redemption period for a time not to exceed 60 days following final allowance or disallowance of a will, a period that may end after the 18-month period. The statute requires a recording of the court’s order in the registry record.

The examiner should be aware that some defective municipal procedures, such as a lien being recorded too early or too late, can render the tax lien invalid, thereby preventing the tax lien from encumbering a title. See Section 943. If the lien as recorded does not comply with the statute in effect when it was recorded, the lien will not encumber the title. The examiner should be aware that evidence of some defective municipal procedures may not be apparent from the record in the Registry of Deeds, such as the failure of the municipality to send out certain notices.