More than a dozen counties – and their treasurers – are being named in a series of class action lawsuits over property tax foreclosures.
Donald Visser with Visser and Associates, PLLC says, “We’ve started a number of class actions … the result of a number tax sales over the years where people’s property has been foreclosed for unpaid taxes.”
The lawsuits are focused on counties where homeowners lost their homes due to delinquent taxes. Standard procedure is that the county forecloses – the house sells – and the county uses the proceeds to pay the taxes owed. Visser says, “And very often the counties pocket quite a bit of equity as well. And they don’t return that to the taxpayer. And in fact the extra funds go into the county coffers.”
Attorney Don Visser says that’s not right. “It was never a question over the county or local government getting a fair amount of taxes. That’s not an issue in the case. Nobody’s contesting those taxes.” But he says after the taxes were paid in full, “They knew they should return the funds, and they didn’t.” He says it usually means thousands – if not tens of thousands of dollars that should not be going to local government. “Whatever they bring at a tax sale is whatever they bring. And people end up losing a significant amount of equity.”
He cites one example in Leelanau County, where a suit has been filed. “Fair market value of $180,000. It had taxes on it for just a little over $10,000. And it’s gone. $170,000 worth of equity just supposedly evaporates into mid-air.”
That attorney tells 9&10 that it’s not just the fact that the counties are handling this incorrectly, but also that Michigan Supreme Court has already had a ruling on this issue last year. “The Michigan Supreme court said that’s unconstitutional. You can’t take people’s property like that. At a minimum they’re entitled to whatever was received more than their taxes.”
That state Supreme Court ruling was last July – and still no refunds. “Since then there have been efforts to get the counties to pay.” And in a word? “Unsuccessful.”
The policy is not just isolated to one or two counties. In fact 19 different counties are named in class action lawsuits at the Circuit Court level. And Visser says 43 counties will be named in a similar effort in federal court. “It is a widespread policy, because that’s the way the state legislature set it up. So all of the counties have been operating under that statute.” But again he points to the Supreme Court’s ruling last summer. “If the federal cases proceed forward, the state cases would be put on hold. If the federal court ultimately would decide not (to take up the issue) … then these cases would go forward in the individual (Circuit) courts.”
The Treasurer in Leelanau County referred us to the attorney handling the issue for the county. That attorney did not return our phone call seeking comment. In Grand Traverse County, the Treasurer returned our call after this story aired and was already published online. They have not yet commented on the suit. A follow-up story with the Michigan Association of County Treasurers is set to air on Monday January 25th and will also be posted on our website.
According to Visser and Associates, suits have been filed in the following State Circuit Court Counties:
Kent
Ottawa
Kalamazoo
Muskegon
Calhoun
Van Buren
Oceana
Ingham
Grand Traverse
Mason
Leelanau
Chippewa
Missaukee
And will be filed this month in Circuit Court Counties:
Monroe
Houghton
Delta
Barry
Wexford
Delta
Federal Court filings in the Western District:
Naming all 43 counties and treasurers that are within the Western District
Alger, Allegan, Antrim, Baraga, Barry, Benzie, Berrien, Calhoun, Cass, Chippewa, Delta, Dickinson, Eaton, Emmet, Gogebic, Grand Traverse, Hillsdale, Houghton, Ingham, Ionia, Kalamazoo, Kalkaska, Kent, Lake, Leelanau, Mackinac, Manistee, Marquette, Mason, Menominee, Missaukee, Montcalm, Muskegon, Newaygo, Oceana, Ontonagon, Osceola, Ottawa, Saint Joseph, Schoolcraft, Van Buren, and Wexford
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