Michigan Supreme Court to hear oral arguments in challenge to state's property tax foreclosure law | Michigan Radio
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Michigan Supreme Court to hear oral arguments in challenge to state's property tax foreclosure law

Nov 5, 2019

Credit Steve Carmody/Michigan Radio

Oral arguments will take place Thursday in the Michigan Supreme Court in a lawsuit challenging Michigan's property tax foreclosure law.

The case is about whether counties that keep surplus proceeds from a tax foreclosure sale violate the takings clause of the U.S. and Michigan constitutions.

The plaintiffs are two men who lost their properties because of unpaid property taxes.

The lawsuit says Oakland County kept the entire proceeds from each foreclosure sale even though the proceeds of each sale were far more than the amount owed in back taxes, interest, penalties, fees and costs.

According to the plaintiff's brief,  the county pocketed $76,000  and $24,215 in surplus proceeds, respectively, from the two foreclosure sales.

The brief argued that "the seizure of this equity violates the Michigan and federal constitutional mandates that the government pay 'just compensation'."

"Michigan counties are stealing equity from people by the way they've chosen to collect taxes," said Christina Martin, one of the attorneys for the plaintiffs. "It doesn't have to be this way. Most states are not doing it this way."

Martin is with the Pacific Legal Foundation, a non-profit legal group that advocates for individual liberties and property rights.

"No amount of notice in the mail makes it okay to steal from people, and that's what's happening here," said Martin. "You and I couldn't take more than belonged to us if somebody owed us money. But that's what the government is doing."

Oakland County claimed in its brief that Oakland County did not "take" the plaintiff's property. It said the plaintiffs "voluntarily relinquished it by failing to pay taxes or take appropriate action in response to numerous delinquency notices and the judicial foreclosure process."

The County's brief argued that the plaintiffs could have chosen to pay the taxes and keep the property - or alternatively they could have avoided foreclosure and kept any surplus proceeds if they had chosen to sell the property and pay the back taxes from the proceeds. 

Nine amicus briefs were filed in the case, including one for the plaintiffs by the AARP Foundation and one for the county by the Michigan Association of County Treasurers.

Oakland County officials were not immediately available for comment.