Source: mlive.com

GRAND RAPIDS, MI — Counties across Michigan foreclosed on homes for outstanding property taxes, sold them at auction and illegally kept the profits, according to a class-action lawsuit filed in federal court last week.

The lawsuit names treasurers from 44 of Michigan’s 83 counties, including Muskegon, Kent and Kalamazoo, where defendants claim the government illegally profited off their inability to pay property taxes.

Examples provided in the lawsuit cite cases in which residents owed property taxes far less than what their homes eventually auctioned for. In once case, the lawsuit claims Kalamazoo County profited nearly $275,000 from the sale of two properties seized from the same owner, who owed $29,000 in unpaid taxes.

Attorney Donald Visser of Visser and Associates in Kentwood said he wants his clients and thousands of others who have faced the same dilemma, but have not filed a lawsuit, to be compensated.

“Some people would say, well, if you can’t afford your property, you should sell it and pay off the taxes,” Visser said. “What we have found is a lot of people that fall into this category have a story to tell. Some were in the process of dying when it happened, some were seriously ill, some of them basically can’t read or write.”

Michigan law allows counties to foreclose on properties when taxes have gone unpaid for three years. The annual foreclosure deadline is March 31. Counties may then sell properties to recoup unpaid taxes, along with additional interest, costs and fees, but they can’t keep profits, the Michigan Supreme Court ruled in July 2020.

“The Michigan Supreme Court said, no, no, no,” Visser said. “That’s unconstitutional to take surplus. Yes, it’s OK to sell their property, but if you sell if for more, you have to return it.”

Following the ruling, the Michigan Legislature in December 2020 passed a law that outlines how prior owners of foreclosed homes may file claims for the profits, should there be any. It requires notice of claims to be filed by July 1. The problem is, according to Visser, his clients homes were sold prior to that law taking effect.

“In none of these cases were claims filed, because the law wasn’t even in effect on July 1, (2020),” Visser said. Consequently, the homes were sold and the accused counties are fighting the return of profits, he said.

MLive requested comment from several county treasurers named in the lawsuit but has not received a response.

The lawsuit is filed in the U.S. District Court for the Western District of Michigan in Grand Rapids.

The following examples of foreclosure sales in 2020 that resulted in profit to Michigan counties appear in the lawsuit:

  • Kalamazoo County sold two properties with $28,750 in past due property taxes for $302,500, resulting in $273,750 profit to the county.
  • Kent County sold a property with $7,309.81 in past due property taxes for $102,000, resulting in a $95,190.19 profit to the county.
  • Calhoun County sold a property with nearly $3,400 in past due taxes for $14,000, resulting in a $10,600 profit to the county.
  • Muskegon County sold a property with $4,400 in past due property taxes for $25,250, resulting in a $20,850 profit to the county.
  • St. Joseph County sold a property with $2,600 in past due property taxes for $25,250, resulting in a $22,650 profit to the county.