The COVID-19 pandemic has created economic difficulties for many individuals. In 2020, County Treasurers, in conjunction with and at the direction of the State, determined that it was appropriate to cancel all tax foreclosure sales. Since the moratorium in 2020 and the continuing pandemic, there has been some uncertainty about whether counties would hold tax foreclosure sales in 2021.
Pursuant to The General Property Tax Act (LINK) Michigan has a three year property tax forfeiture and foreclosure process. Property taxes are assessed by the local jurisdiction (City, Township, Village, etc.) and are payable twice each year. If those taxes are not paid by March 1 of the year following their due date, the County will pay the outstanding taxes to the local jurisdiction, add a fee and attempt to collect the taxes from the property owner. If those taxes remain unpaid until March 1 of the second year following their due date, the property is forfeited to the County. When the property taxes remain unpaid going into the third year, the County Circuit Court will hold a hearing to determine whether a foreclosure judgment should be entered. Delinquent owners can appear for the hearing to dispute the validity of the tax, enter a payment arrangement, or pay the tax balance. When valid taxes remain unpaid and the owner is otherwise not in a payment arrangement with the County, the order of foreclosure is entered. Once an order of foreclosure is entered, property owners then have until March 31 to redeem the property by paying all property taxes that are at least three years old. Any property that is not redeemed by the March 31 deadline will then be sold by the County (or in some instances the State) at a public auction held generally in the fall each year.
Counties sent out tax forfeiture and tax foreclosure notices in 2021; however, some of the counties have since extended the foreclosure moratorium through 2021. In counties where the moratorium has been extended, foreclosure of tax delinquent properties will either not occur in 2021 or will be limited to certain types of properties or properties with specific characteristics. While there are still many counties that have not extended the foreclosure moratorium, a few have.
Oakland County issued a public notice (LINK) extending the 2020 tax foreclosure moratorium through 2021. Oakland County's extended moratorium applies to all tax delinquent and foreclosure eligible properties, except for 13 properties with a range of environmental issues. This means that while delinquent taxes are not being excused, the County will not be foreclosing on the properties in 2021, and delinquent owners will have an additional year to pay tax delinquencies subject to foreclosure.
Washtenaw County also issued a public notice (LINK) regarding 2021 tax foreclosures. Unlike Oakland County, Washtenaw County's foreclosure moratorium only applies to occupied properties. Occupied properties that are subject to foreclosure in 2021 will be withheld from foreclosure, and the owners of those properties will have an additional year to pay tax delinquencies subject to foreclosure.
Wayne, Macomb, Livingston, and the other area counties have not yet extended a tax foreclosure moratorium into 2021. Properties subject to foreclosure in these and other counties must pay 2018 and earlier taxes, or enter a payment plan, before March 31, 2021 to avoid foreclosure.
For more information or to discuss tax foreclosure issues that your association may be facing, please contact one of the experienced attorneys at our Firm.