GRAND RAPIDS, Mich. — Michigan counties are no longer able to keep excess funds made from foreclosure auctions.
That's the decision made by the Michigan Supreme Court that has opened up a settlement agreement to pay back homeowners who faced foreclosure from 2012 to 2020.
However, those who could receive funds had to have filed a claim for the class action lawsuit in the spring or summer of 2023. Also, the sale of their properties from county governments had to have resulted in an access of funds beyond what was owed in taxes.
That means, if you owed $10,000 in back taxes, and a county treasurer sold your property for $90,000, those who filed a claim could be owed $80,000.
"If I sell the property for more than what is owed, or any county treasurer sells the property in an auction for more than what's owed due to lack of not paying property taxes, that excess dollars now under the new law, can be claimed by previous parcel owners," said Kent County Treasurer Peter MacGregor.
According to Macgregor, Michigan statute allowed counties to keep those excess funds, but that is not allowed anymore.
MacGregor explained the process property owners can now go through if their property is foreclosed on because of tax debt.
"Anybody who has a, a interest in a parcel, and we foreclose on it, that they can file a claim for those excess proceeds, if, if we sell it for more than what is owed on the unpaid delinquent taxes," said MacGregor.
According to the treasurer, the county has been preparing to pay back those excess funds as a result of a settlement agreement made last week, adding it won't come out of their general fund.
"There's money set aside. And it's, it possibly could be close to, uh, or up to, I would say, $2.6 million," said MacGregor.
The class action lawsuit involved 43 Michigan counties and more than 3,300 claims. Attorneys Ron Ryans, Owen Ramey and James Shack said there's more than $43,00,000 that could be given back to Michigan property owners.
Cooley Law School Professor Michael McDaniel said the past process of counties keeping excess foreclosure funds violated the 5th Constitutional Amendment.
"Specifically your fifth amendment right, the private property, your property cannot be taken for a public purpose without due compensation, and you're alleging that there is not due compensation being paid because the county is keeping the the surplus," said McDaniel.
While counties are working out how to get money to property owners, it could take some time. The decision is being appealed, and MacGregor said it could be another year until that's settled.