Foreclosure Claims (PAs 253, 255 & 256)
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, however, 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.
New legislation passed in December 2020 to amend state law to comply fully and fairly with the Michigan
Supreme Court Rafaeli decision. The Michigan Association of County Treasurers supports the new
Public Acts 253, 255 and 256 change current tax law to create a pathway to
recouping the proceeds from a tax sale of their foreclosed property.
The new public acts allow for the following:
- People can request the remaining proceeds from the sale of a foreclosed property, even if they
weren't able to pay their property taxes. This applies to both business and residential property
- The pathway starts with property owners filing their claim by July 1 following the date on which
property was foreclosed. This is for properties transferred or sold after July 17, 2020.
- Foreclosed property transferred or sold before July 18, 2020 a claim may be made only if the
Michigan Supreme Court orders that its decision in Rafaeli applies retroactively.
- All taxes, interest, penalties and fees must be paid prior to any release of remaining proceeds.
- People with delinquent property taxes will be notified several different ways and several
about their option to receive remaining proceeds.
- Cities, townships and land banks must pay fair market value for tax-foreclosed property they
under their "right of first refusal" so any remaining proceeds can go to former owners.
- County treasurers are no longer required to keep those proceeds in a delinquent property tax
which often pays for the costs of handling foreclosures.
- The laws allow the costs of foreclosure to be recovered in line with the Michigan Supreme Court
- We believe this is a fair and equitable solution to the Michigan Supreme Court's July 2020 ruling that
county treasurers couldn't keep proceeds of tax sales.
- County treasurers use a variety of methods and numerous community resources to help people pay their
taxes and prevent tax foreclosure.
- We prevented 97.5 percent of property tax foreclosures in 2019.
Poverty Exemptions (PA 253)
- People filing for property exemptions only have to do so every three years now, instead of every year.
retroactive to exemptions filed in 2019.
- A city or township must first adopt a resolution to allow longer poverty exemptions for homeowners who
- The property owner must be on a fixed income solely from public assistance that is not subject to
annual increases beyond the rate of inflation.
- If the owner sells the property, moves or experiences a change in household assets or income that would
make them ineligible for the exemption, they have 45 days to notify the county treasurer's office.
they may have to repay their taxes with interest.