Tax foreclosures happen when homeowners don’t pay their property taxes for three years. The properties are then put up for sale at two public auctions in the fall.
What Are Foreclosure Surplus Proceeds?
The county is supposed to give homeowners any surplus proceeds from the foreclosure auction. This is money from the sale of a property minus the taxes and fees owed to the county. A Michigan Supreme Court 2020 decision held that former property owners have a right to proceeds from tax foreclosure sales.
Lawmakers later established rules for people with foreclosed properties to apply to receive proceeds beyond the property taxes they owed. A growing number of suits across the state also sought to recover the funds for property owners. But it was still unclear whether people with foreclosed property sold before the 2020 decision could get surplus proceeds, so the matter went back to the high court.
How Much Could Former Owners Recover?
The Michigan Department of Treasury does not have an assessment for how much counties received in surplus proceeds. This is because this is typically a county-level issue.
The Michigan Association of Counties also does not currently have data from county treasurers.
In addition, the Wayne County Treasurer has not publicly stated how much They may owe property owners.
In Detroit, about 2,400 previous homeowners may be able to recover $20 million. This just from 2015 to 2019 tax foreclosure auctions.
The Wayne County Treasurer’s Office did not offer an estimate. The Treasurer’s office stated it does not comment on pending litigation. The exact litigation in question is unclear. But, Wayne County is a defendant in a class action lawsuit in federal court related to surplus proceeds. That matter went before the 6th Circuit U.S. Court of Appeals, according to a recent court filing.
How Do Former Owners File A Claim?
There are essentially two ways to make a claim for surplus proceeds. One process is for sales before December 22, 2020, and another is for after December 22, 2020. Former owners must file these claims with foreclosing county governments.
Here’s a general overview of how to start off the process in Wayne County, for instance:
- Before 2020: If a property was foreclosed and sold at auction between 2015 and 2020, former owners may be able to recoup proceeds by filling out a “notice of intent” form, according to the Wayne County Treasurer’s Office website. The deadline is March 31, 2025, and the notarized form must be delivered by mail or in person, to the Wayne County Treasurer’s Office.
- After 2020: Former property owners looking to make claims on leftover proceeds from foreclosure sales after December 2020 can complete and return a notarized form, via mail or in person, by July 1 the year of the foreclosure.
Read More About Wayne County Tax Foreclosures On MFI-Miami.com.
Thousands of Michigan tax foreclosure victims can claim any profit made by the county from the tax auction.
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