Recent headlines accusing county treasurers of illegally profiting from tax foreclosures couldn’t be further from the truth. Inaccurate and sensationalized, a few resourceful Michigan lawyers are seeking large class action contingency fees by generating lawsuits and news that confuses the public, costs taxpayers needless legal expense and discourages those who need help from contacting their most helpful public official — that is, their county treasurer.

Once such case is Tyler v. Hennepin County, Minnesota, a case brought by the libertarian-leaning nonprofit Pacific Legal Foundation, which will be heard by the U.S. Supreme Court in April.

Geraldine Tyler, a 94-year-old African American grandmother, over-extended herself financially and lost a property to tax foreclosure because of a $15,000 property tax debt. Her property — a condo in Minneapolis — was sold to satisfy the tax debt. The condo brought $40,000.

Minnesota law allowed the county to keep the leftover sale proceeds of $25,000 and disburse it to local governments throughout the county. Pacific Legal Foundation claims it is unconstitutional to retain remaining sale proceeds.

While the facts in the Tyler v. Hennepin County case are disturbing by appearance, what is often overlooked is the immense, publicly paid process involved in tax foreclosure. It is an extensive and expensive legal procedure that takes several years and requires costly court activities.

Essentially, tax foreclosure is a lawsuit brought against a landowner for not paying property taxes. The purpose of the foreclosure is to pay back the tax revenue and expense that was lost because of non-payment. This includes revenue lost by cities, villages, and townships in addition to local schools, county government, police and fire protection, 911 services and drain districts, in addition to road, park, and library millage.

It is important to note that many foreclosed properties remain unsold for a variety of reasons such as poor conditions, bad septic systems, condemned structures, or lack of infrastructure. As one can imagine, tax foreclosures are not in the best of condition. Unsold properties remain the possessions of the public under the county or state and must be managed and cared for until they can be returned to a productive use.

Should the U.S. Supreme Court rule in favor of Pacific Legal Foundation in the Tyler v. Hennepin County and determine that tax foreclosure is an illegal taking by the U.S. Constitution, it could shatter our property tax system throughout the country, leaving no way to enforce property tax collection. One may wonder whether that isn’t the true objective in this legal case.

Michigan county treasurers believe there should be a pathway available for citizens to claim the leftover sales revenue on tax foreclosures. Still, tax foreclosure in Michigan is dictated by state law, not county treasurers. (Michigan Compiled Law MCL 211.78.) This law outlines a four-year tax collection process requiring a property with unpaid, delinquent real property taxes to foreclose and be auctioned at a public sale. For an info graphic of the four-year timeline, go to www.mactreasurers.org.

Sometimes a property sells at auction for more than back taxes. Before 2020, Michigan law required the treasurer to deposit these funds into a tax collection account or a dedicated fund for foreclosure costs. This served to protect taxpayers from the burden of bearing the expense of foreclosure, water management or environmental cleanup. If there were leftover funds in the account, state law permitted the treasurer to transfer them to the county’s General Operating Fund but only after two years. Treasurers did not casually transfer these funds to a county’s operation; they were following the law.

Laws change. The Michigan Supreme Court ruled in 2020 that those who had equity in property at the time it was tax foreclosed can file a claim for leftover auction proceeds beginning in 2021. This ruling came about because of a questionable tax foreclosure on a property for $8.41. It should never have happened, and it was Michigan county treasurers who led the charge to help the state Legislature craft a new law that fairly enables parties holding interest in a property to file claims for excess auction proceeds. The new law — MCL 211.78t — has been called a groundbreaking model for other states.

County treasurers work tirelessly to prevent tax foreclosures whenever possible. Statewide, county treasurers prevent more than 92% of property forfeitures from going to foreclosure every year. In 2020, we prevented 133,520 out of 140,783 scheduled tax foreclosures in Michigan. We use a wide range of services to prevent foreclosures, including hardship extensions on taxes for the unemployed, ill people, and those facing unexpected financial trouble.

Treasurers also refer taxpayers to social services and assistance programs such as the Michigan State Housing and Development Authority’s Michigan Homeowner Assistance Fund, which provides up to $25,000 in taxpayer assistance. We also work with a long list of nonprofit organizations that help people facing tax foreclosure.

If you are having difficulty paying property taxes and facing tax foreclosure, don’t delay — call your county treasurer today. Treasurers are tax foreclosure prevention experts and we have lots of resources available to help. We want you to keep your home.

For information on Minnesota tax foreclosure law, go to https://www.revenue.state.mn.us/delinquent-real-property-tax-and-tax-forfeiture-manual. Go to www.mactreasurers.org for an understandable infographic on Michigan’s tax foreclosure law and the statutory timeline for tax foreclosure.