In Defense of In Rem

The in rem property tax foreclosure process under G.S. 105-375 has recently come under criticism from some title insurance companies and attorneys. They raise two related arguments against using in rem.  First, they argue that courts are quick to overturn in rem sales based on concerns about the notice given to owners and lienholders during the in rem process.  Second, they claim that the limited availability of title insurance for properties sold at in rem foreclosures suppresses the sale prices of these properties, impairs their resale value, and consequently harms local governments’ real property tax bases.

I was skeptical of these arguments so thought it best to get input from the real experts—local tax collectors—to learn if these concerns cause them to question the usefulness of the in rem process.  The answer was a resounding “no!”   Read more »

How to Deal with Heir Property

Few things cause more headaches for property tax offices than heir property.  When a taxpayer dies owning real property, listing, exemption eligibility, billing, and enforced collection questions suddenly become very difficult to resolve.

The traditional approach to resolving these questions is for the tax office to wait until a court administers the dead taxpayer’s estate and identifies the parties who are the rightful new owners of that taxpayer’s property. But that might take years, or it might never happen.

After discussing the issue with my property law expert colleague Chuck Szypszak and other experienced practitioners, it’s become clear to me that tax offices may change ownership of heir property without waiting for action by a court.  The new approach described below should reduce the time property remains listed in the name of unknown owners and the headaches associated with those listings. Read more »

Dealing with Land Uses Not Specifically Addressed in a Zoning Ordinance: The Saga Continues

If a person is considering undertaking a particular land use, it is important that they know whether or not that would be allowed by the zoning ordinance.

It is usually a simple proposition to determine whether or not the use is allowed. The owner finds out how the property is zoned – what zoning district applies to this parcel – and then sees whether the intended use is listed as a permitted use on the property.  The ordinance may provide that the use is always allowed in the applicable zoning district (often referred to as a “use by right” or “permitted use”) or only allowed with a special review (a special or conditional use permit).  If the intended use is prohibited, the person must find a different site or seek to have the property rezoned to a district that allows the intended use.

But what if the zoning ordinance does not specifically address the intended use? Perhaps it is a new type of land use that was not contemplated when the ordinance was adopted.  If the ordinance is more than a few years old it likely does not address solar farms, sweepstakes parlors or other “new” land uses.  Perhaps it is a use the local government did not anticipate would be proposed in their community, such as a tattoo parlor, race track, or shooting range.  Or perhaps the local government tried to shorten and simplify the ordinance by deleting page after page with detailed listings of specific uses in a permitted use table.

Whatever the reason, from time to time someone will propose to undertake a type of land use that is not expressly addressed by the ordinance. What happens then?  In recent years our court of appeals has dealt with this question in a series of cases, with the state Supreme Court recently weighing in with some important conceptual guidance. Read more »

Repealing Ordinances

The Upsette City Council adopted a controversial ordinance limiting the number of dogs and cats per residence.  Three of the council’s five members lost their seats at the next election to opponents who campaigned on pledges to repeal the pet ordinance.  Almost immediately upon taking office, one of the new members introduced a resolution declaring the ordinance repealed.  The council voted three-to-two in favor of the resolution, and the mayor, who could vote only in the event of a tie, announced that the resolution had been adopted.

Did the council successfully repeal the pet ordinance? Read more »

Expanded Motor Vehicle License Tax Authority for Municipalities

A municipality currently is authorized under general law to levy up to a $5.00 licensing tax on any motor vehicle resident in the municipality (motor vehicle license tax). See G.S. 20-97(b). A municipality’s governing board may levy the tax in the unit’s annual budget ordinance. The revenue generated by the tax is unrestricted; it may be expended for any lawful purpose. Several municipalities have received local act authority to increase the amount of the tax. And, as of July 1, 2016, all municipalities will have the authority to levy up to a $30.00 motor vehicle licensing tax. See Section 29.27A of S.L. 2015-241.

The expanded tax authority comes with some strings, though. All of the additional revenue that a unit generates from increasing the motor vehicle license tax above the current $5 limit is earmarked for certain expenditures. The earmarks do not apply if a unit continues to only levy the $5.00 tax. They also do not apply if a unit levies a motor vehicle license tax under local act authority.

The expanded authority is effective as of July 1, 2016. Beginning with the FY2016-17 budget ordinance, if a unit levies a motor vehicle license tax pursuant to general law authority the proceeds from the tax are earmarked as follows: Read more »

Writing Off Old Property Taxes

Quick poll question:  does your local government annually write off all property taxes that are more than 10 years old? (I bet everyone reading this post just nodded yes.)  Okay, second poll question: where in the Machinery Act are local governments authorized to write off all taxes that are more than 10 years old?  (I bet everyone reading this post just shrugged.)

It’s true that most local governments remove old taxes from their books after 10 years. It’s also true that the Machinery Act doesn’t explicitly authorize this approach.  Here’s my analysis of the very common question about what to do with old taxes.  Read more »

New Law: Consenting to Medical Treatment for a Child Placed in the Custody of County Department

Through S.L. 2015-136, “An Act to Make Various Changes to the Juvenile Laws Pertaining to Abuse, Neglect, and Dependency,” the General Assembly enacted G.S. 7B-505.1 and G.S. 7B-903.1(e).These two new statutes address medical decision-making authority for a child who is placed in the custody of a county department through an order entered in an abuse, neglect, and dependency action. These new laws apply to all abuse, neglect, and dependency actions that were pending on or filed after October 1, 2015.
Read more »