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Late property tax payers could see some relief

You could say the state’s constitution is solid, while numbers tend to be more fluid. So when a hard, fast number is placed into state statute, there’s a good chance that legislators will eventually ask, “What were we thinking?”

Such is the case with how much interest must be paid on delinquent property taxes.

When the Legislature crafted the current law in 1990, 30-year fixed-rate mortgages were at 10.13%. So, they put into law that those behind on their property taxes must pay at least 10% interest on their late payments and penalties, and possibly more depending upon how high the prime rate was.

Today, mortgage rates are under 4% and the current prime rate is 3.25%. Yet, Minnesotans trying to repurchase their homes from tax forfeiture are forced to pay at least 10% interest.

That would change under HF2800.

Sponsored by Rep. Jerry Hertaus (R-Greenfield), the bill would eliminate that 10% floor and allow counties to establish their own interest rates on delinquent property taxes and contracts to repurchase tax-forfeited property.

Presuming counties would choose rates more in line with what the real estate market dictates, it could help many Minnesotans who are currently priced out of the process repurchase their homes.

On Wednesday, the House Property Tax Division laid the bill over for possible inclusion in the division’s report to the House Taxes Committee. The bill’s companion is SF2764. Sponsored by Senate President David Osmek (R-Mound), it awaits action by the Senate Taxes Committee.

“If you don’t pay your property taxes on time, there’s both a penalty on a monthly basis and an interest rate,” Hertaus said. “They work in tandem and accumulate against the unpaid balance until paid. … The market has changed, and interest rates have been low for an extraordinarily long time.”

“The interest rate has not reached double digits since 1991,” said Ron Elwood, supervising attorney for Mid-Minnesota Legal Aid. “The current law creates a barrier for homeowners to repurchase their homes once they’re in tax forfeiture. Everyone wants people to be able to stay in their homes.”

Rep. Paul Anderson (R-Starbuck) asked what tools counties have available to help those behind on property taxes.

“Many counties do have a process that involves signing a confession of judgment and entering into a payment plan,” Hertaus said.

“Counties will be as lenient as they can be to keep families in their homes,” Elwood added.

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