A Guide to Saving Your Property from Tax Foreclosure

December 4, 2018

Every year thousands of people lose their homes or commercial properties to tax foreclosure.  The tax foreclosure process is complicated, and many people lose their homes and the substantial equity they have built over many years.  This disproportionally affects the elderly and the mentally ill. The tax foreclosure timeline is set forth below:

Current Year

  • January 1 – December 31: During this time, your property taxes are made payable to your local city, village or township government.

First Year of Delinquency

  • January 1 – December 31: During this time, your property taxes are made payable to your local city, village or township government.
  • March 1: On March 1, your taxes officially become “delinquent” and become due to the County Treasurer’s Office.
  • November 1: Your property is added to preliminary forfeiture list.

Second Year of Delinquency

  • May 1: A foreclosure petition is filed in Circuit Court.
  • June 1 – January 31: All owners and lien-holders are identified and contacted through title research.

Third Year of Delinquency

  • January: Show cause hearings are held, giving property owners a chance to appeal foreclosure.
  • February: Circuit Court hearing is held, Foreclosure Order signed by the judge.

March 31: Taxpayers lose all interest in their property.

  • August: Tax foreclosed properties are offered at auction to recover back taxes, interest and penalties.

There are many local and federal programs to help people who are behind on taxes prior to March 31 of the Third Year of delinquency, however, after that date absolute title vests in the county and the property along with all of its equity is lost.

The General Property Tax Act, MCL 211.1, et seq., is draconian in nature and only allows for relief from a Foreclosure Judgment if the property owner was denied due process.  Counties rely upon MCL 211.78k(5)(g) of the General Property Tax Act and Wayne County Treasurer v. Perfecting Church (In re Treasurer of Wayne Foreclosure), 478 Mich 1. 10-11; 732 NW2d 458 (2007) in support of this proposition.  This generally means that the only way to set aside a tax foreclosure judgment is in cases where the property owner did not receive notice due to an error on the part of the County.

At OSBIG we are always looking for creative ways to help our clients and created a unique argument that helped two of our clients save their homes last year.  Both clients owned homes with substantial equity which were not encumbered by mortgages and their properties were lost at tax foreclosure. The clients were devastated with the realization that they were about to be homeless and had lost hundreds of thousands of dollars of equity in their homes.  One client had been diagnosed as clinically depressed and even though he knew of the delinquent property taxes and tax foreclosure process he was physically unable to do anything about it. The other client was 84 years old and had suffered a stroke and a seizure in the past few years, leaving him with limited mental facilities.

OSBIG successfully argued that incompetent people could not comprehend the importance of the foreclosure proceedings because they lacked the capacity to do so, and therefore any service upon them would be violative of their due process rights, as they would not have been able to understand the significance.  This argument had never been made in relation to seeking relief from the General Property Tax Act before we made it.

This is the kind of out of the box thinking and zealous advocacy that you can expect when you hire OSBIG.