Death and (Property) Taxes

Benjamin Franklin knew that two things were certain: death and taxes. For Michiganders owning real property, that’s especially true. Michigan statutes on delinquent property taxes (the General Property Tax Act) establish a process for notifying property owners that their taxes are late and that if they aren’t paid by a date certain, forfeiture and foreclosure will follow.

Real property is taxed annually, with two tax bills typically due for each parcel: summer and winter. Townships and cities collect those taxes and distribute them among the various units of local government that are due a share: library board districts, school districts, fire districts, and community college districts, for example, as well as more well-known units of government like the cities and townships themselves.

Every March 1st, taxes that have not been paid become delinquent. This triggers a two-year process wherein the foreclosing governmental unit (often a county treasurer) begins sending statutorily required notices to the property owner: one by first-class mail on June 1st, another by first-class mail on September 1st, then one by certified mail the following February 1st. If the taxes haven’t been paid by March 31st, the property forfeits to the foreclosing governmental unit.

But even then, you still have time to redeem your property before losing it forever. By June 15th (taxes are now more than 15 months overdue), the foreclosing governmental unit files a petition for foreclosure. From here, the court will schedule two hearings: one, called a “show cause” hearing, is an opportunity for the property owner to contest having the real property’s interest “vest” in the government. Typically, this hearing is for matters like arguing that the tax was improperly assessed or the taxes have already been paid. The second hearing, which must be held at least a week after the first, is the actual foreclosure hearing in which the property owner can dispute the foreclosure for any number of reasons. Both of these hearings cannot be scheduled before January 31st (almost two years after original tax due date).

Unless the property owner has successfully contested the foreclosure, the government obtains the right of possession on April 1st, twenty-five months after the original tax due date.

Despite the lengthy and detailed process (and other requirements the government must follow like conducting a title search), there isn’t much an attorney can due for a property owner once the process has run its course. Errors by the foreclosing governmental unit won’t be enough to convince a court to give relief unless the government’s activities violated “due process.” And while due process can be a complex concept, in matters like these it comes down to a simple determination: did the property owner have “notice” of the pending foreclosure? And did they have an opportunity to be heard by an impartial judge? If the answers to both questions are yes, then losing your property will be as certain as, one day, losing your life.

Call Noud & Noud today if you’re facing any problems with delinquent property taxes! The earlier we can get started working with your foreclosing governmental unit, the better outcome we may be able to obtain in negotiating your tax payments and fending off foreclosure.