Government Affairs

Rafaeli Ruling/MSC Initiative

Background

County treasurers use a variety of methods and numerous community resources to help people pay their taxes and prevent tax foreclosure. The Michigan Supreme Court recently ruled that people who have property foreclosed for unpaid taxes have a common law right to any remaining proceeds from the sale of the property, after all the taxes, interest, penalties, fees, and costs have been paid. This decision is called Rafaeli after the person who began the case.
The Michigan Association of County Treasurers supports proposed legislation to amend state law to comply fully and fairly with the Michigan Supreme Court Rafaeli decision. The legislation proposed by Senators Jim Runestad (R-White Lake) and Peter J. Lucido (R-Macomb), and Representative Brandt Iden (R-Kalamazoo) changes current tax law to include several things:

Proposed Amendments

• It allows people to request the remaining proceeds from the sale of a foreclosed property through the judge who ordered the tax foreclosure.
• If people cannot pay their property taxes to avoid foreclosure, they can receive any remaining proceeds after the sale of the property. People with delinquent property taxes are notified several different ways and times about their option to receive remaining proceeds.
• The judge would decide the amount owed to the claimant, which would be paid within 21 days of the order.
• It allows anyone with interest in the property to file a claim with the county treasurer and requires the treasurer to prepare an accounting of taxes and costs to determine if there are any remaining proceeds (or a loss) on a specific property.
• All taxes, interest, penalties, and fees must be paid prior to any court-determined release of remaining proceeds.
• Cities, townships and land banks must pay fair market value for tax-foreclosed property they purchase under their "right of first refusal" so any remaining proceeds can go to former owners.
• It prohibits counties from taking remaining proceeds for their general operations.
• It allows the costs of foreclosure to be recovered in line with the Supreme Court decision.

County treasurers support these changes to existing state law so it can fully and fairly comply to the Michigan Supreme Court Rafaeli decision and will continue to prevent foreclosures whenever possible.

Status Updates

• December 7, 2020 - County treasurers support bills to update tax foreclosure legislation - Update

2000-8 Delinquent Property Tax Foreclosure Public Act 123 of 1999