Sale of Land for Overdue Rates and Charges A presentation to the 2012 Local Authorities Revenue Management Association Conference By Tim Fynes-Clinton.

Sale of Land for Overdue Sale of Land for Overdue Rates and ChargesRates and Charges

A presentation to the 2012 Local Authorities Revenue Management Association

Conference

By

Tim Fynes-Clinton & James Hastie

King & Company Solicitors

OverviewOverview

Levying ratesGiving rate noticesWhat are overdue ratesOptions for recovery of overdue

rates Sale for arrears process

When & how to start process

Overview (continued)Overview (continued)

Sale for arrears process (continued)Giving rate noticesContents of notice of intention to sellGiving of auction noticeEnding auction procedure before

auction

Overview (continued)Overview (continued)

Sale for arrears process (continued)Auction dayDealing with proceeds of sale

Common issues/pitfallsSome rates must be overdue for at

least 3 years

Overview (continued)Overview (continued)

Common issues/pitfalls (continued)Rates notices not properly givenService of notice of intention to sell

and auction noticeVacant possessionLand owned by deregistered

companies

Levying ratesLevying ratesGeneral rates must be levied on all rateable land:

sections 93 and 94 of the Local Government Act 2009

No power to levy rates on land that is exempted from rates : section 93(3) of the Local Government Act 2009 and section 7 of the Local Government (Finance, Plans and Reporting) Regulation 2010

Rates can only be levied by “a rate notice” given to the entity recorded in the Council’s land record as owner of the land: sections 38(1) and 40(b) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Giving rate noticesGiving rate noticesSection 39 of the Acts Interpretation Act 1954

(1) If an Act requires or permits a document to be served on a person, the document may be served—

(a) on an individual—

(i) by delivering it to the person personally; or

(ii) by leaving it at, or by sending it by post, telex, facsimile or similar facility to, the address of the place of residence or business of the person last known to the person serving the document; or

Giving rate notices (continued)Giving rate notices (continued)Section 39 of the Acts Interpretation Act 1954

(continued)

(1) If an Act requires or permits a document to be served on a person, the document may be served (continued) —

(b) on a body corporate—by leaving it at, or sending it by post, telex, facsimile or similar facility to, the head office, a registered office or a principal office of the body corporate.

Giving rate notices (continued)Giving rate notices (continued)Section 39A of the Acts Interpretation Act 1954

(1) If an Act requires or permits a document to be served by post, service—

(a) may be effected by properly addressing, prepaying and posting the document as a letter; and

(b) is taken to have been effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proved.

What are overdue ratesWhat are overdue ratesSection 66 of the Local Government (Finance,

Plans and Reporting) Regulation“Overdue rates or charges are made up of—

... rates or charges that are not paid by the due date for payment stated in the rates notice.

...

The rates or charges become overdue on the day after the due date for payment of the rates or charges stated in the rates notice ...”

Options for recovery of overdue Options for recovery of overdue ratesratesBring court proceedings: section 68 of the Local

Government (Finance, Plans and Reporting) Regulation 2010

Register a charge: section 95 of the Local Government Act 2009

Sell for overdue rates and charges: chapter 2, part 12, division 3 (i.e. sections 70 to 80 of the Local Government (Finance, Plans and Reporting) Regulation 2010)

Giving notice of intention to sellGiving notice of intention to sellCan only occur if rates are overdue for specified

period: section 74(1) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Started by Council resolution: section 74(2) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Must then give notice of intention to sell “as soon as practicable” to “all interested parties”: section 74(3) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Contents of the notice of intention to sell: section 74(4) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Starting the sale process Starting the sale process If, after having given the a Notice of Intention to

Sell, the rates remain unpaid, Council should proceed after 3 months, but not before 6 months, to start the sale process: section 75(1) and (2) of the Local Government (Finance, Plans and Reporting) Regulation 2010

Prepare “auction notice” and publish it in accordance with section 76 of the Local Government (Finance, Plans and Reporting) Regulation 2010

Ending the sale process before Ending the sale process before auction?auction?

Section 75(3) of the Local Government (Finance, Plans and Reporting) Regulation 2010

(3) However, the local government must end the procedures if the local government is paid—

(a) the amount of the overdue rates or charges; and

(b) all expenses that the local government incurs in attempting to sell the land.

Ending the sale process before Ending the sale process before auction? (continued)auction? (continued)

Compare section 75(3) of the Local Government (Finance, Plans and Reporting) Regulation 2010 with section 1042(3) of the (repealed) Local Government Act 1993: -

“The local government may only end, and must end, procedures for selling the land if the amount of all overdue rates levied on the land, and all expenses incurred by it for the intended sale, are paid to it.”

Conduct of auctionConduct of auctionSection 77 of the Local Government (Finance, Plans

and Reporting) Regulation 2010

(1) The local government must set a reserve price for the auction that is at least—

(a) the market value of the land; or

(b) the higher of the following—

(i) the amount of overdue rates or charges on the land;

(ii) the value of the land.

Conduct of auction (continued)Conduct of auction (continued)Section 77 of the Local Government (Finance, Plans

and Reporting) Regulation 2010 (continued)

(2) If the reserve price is not reached at the auction, the local government may enter into negotiations with the highest bidder at the auction to sell the land by agreement.

(3) However, the price for the land under the agreement must be more than the highest bid for the land at the auction.

Conduct of auction (continued)Conduct of auction (continued)Section 77 of the Local Government (Finance, Plans

and Reporting) Regulation 2010 (continued)

(4) If the highest bidder at the auction does not agree to buy the land, the land is taken to have been sold at the auction to the local government for the reserve price.

(5) However, subsection (4) does not apply if the land is held on a tenure the local government is not competent to hold.

Application of proceeds of saleApplication of proceeds of saleSection 79 of the Local Government (Finance, Plans

and Reporting) Regulation 2010(1) The local government must use the proceeds of the

sale of the land in the following order—

(a) to pay any amount agreed for the release of a State encumbrance under section 72(4)(b) or (5);

(b) to pay the expenses of the sale;Examples of expenses of the sale—

• administrative costs incurred by the local government

• body corporate fees

• land taxes owing on the day of sale

Application of proceeds of sale Application of proceeds of sale (continued)(continued)Section 79 of the Local Government (Finance, Plans and

Reporting) Regulation 2010 (continued)

(1) The local government must use the proceeds of the sale of the land in the following order— (continued)

(c) to pay the overdue rates or charges for the land;

(d) to pay any other amounts relating to the land that the owner of the land owed the local government immediately before the sale;

(e) to pay any rates or charges, other than overdue rates or charges, for the land;

Application of proceeds of sale Application of proceeds of sale (continued)(continued)

Section 79 of the Local Government (Finance, Plans and Reporting) Regulation 2010 (continued)

(1) The local government must use the proceeds of the sale of the land in the following order— (continued)

(f) to pay any registered encumbrances, other than State encumbrances, in order of their priority under the Land Title Act;

(g) to pay the person who owned the land immediately before the sale.

Common issues/pitfallsCommon issues/pitfallsRates notice/notice of intention to

sell/auction notice not properly given to ratepayer

Local Government Act, section 239 – substituted service

If you do not know the person’s current address, you must give the relevant notice by publishing the notice:-

in the Courier Mail; the Queensland Government Gazette; and on the Council’s website

Common issues/pitfalls Common issues/pitfalls (continued)(continued)

Vacant possessionLand owned by deregistered

companies – deemed to by owned by ASIC

Difficulty (impossibility?) of selling land held on certain tenures

Need for strict compliance with statutory procedures