Michigan’s revised General Property Tax Act (Act 206 of 1983, as amended) allows the taxing authority to foreclose on real property in less than 2.5 years from the due date of delinquent real property taxes. As a result of this truncated time frame (compared with nearly 6 years prior to 1999), delinquent 2007 real property taxes have already been foreclosed in many counties around the state, including Oakland County, and will be foreclosed on March 1, 2010, in Wayne County. A foreclosure will not only wipe out the interest of the fee owner of the property, but it also will extinguish any leasehold interests (excluding leases related to oil and gas rights) or mortgages on the property. Accordingly, it is in the best interest of not only the property owner but any party with an interest in real property to ensure that the 2007 real property taxes are paid prior to the foreclosure hearing or redeemed following the issuance of the foreclosure judgment.
Once the applicable county circuit court issues a foreclosure judgment, any party with an interest in the foreclosed property has the right to redeem by paying the amount of the delinquent taxes that were the subject of the foreclosure, plus applicable fees, interest and penalties. THE RIGHT OF REDEMPTION FOR UNPAID 2007 REAL PROPERTY TAXES EXPIRES ON MARCH 31, 2010. If a party with an interest in the foreclosed property other than the owner of the property redeems, the redeeming party is entitled to a lien on the property for the amount paid to redeem the property, which lien must be recorded within 30 days. The applicable statute is silent as to the right of the lien holders.
Accordingly, please contact the attorneys in Dykema’s real estate practice group to discuss potential remedies available to such lien holders. Once a property has been foreclosed and the redemption period expires, title vests with the foreclosing governmental unit. A party with an interest in the foreclosed property has the right to appeal the foreclosure judgment to the Michigan Court of Appeals; however, an appeal is limited to the record of the proceedings in the circuit court. In order to initiate the appeal, the appellant must pay to the applicable county treasurer the full amount determined to be due under the foreclosure judgment on or before March 31, 2010. The foreclosure judgment shall be stayed pending a decision by the Court of Appeals.
Absent a successful appeal, following the expiration of the redemption period, the only recourse remaining to a party with an interest in the foreclosed property would be an action for monetary damages based on the foreclosing governmental unit’s failure to deliver the statutorily required notice. The statute does not provide a party with an extinguished interest the right to reacquire lost property rights. Thus, it is imperative that delinquent taxes be redeemed (or the appellate fees be paid) on or before March 31, 2010.