Tax Foreclosure Process in Michigan
When purchasing a home, one thing many first time home buyers fail to take into account when planning a budget is the payment of property taxes. Even a seasoned purchaser can sometimes be hit by unexpected financial emergencies or a sharp increase in the amount of taxes due each year. When property taxes are delinquent in Michigan, the state will forfeit the property and eventually foreclose on the property if the taxes remain unpaid.
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Michigan Property Taxes
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Owners of real property in Michigan are subject to paying property taxes twice a year. Taxes are traditionally sent out by the county treasurer in December and July and are due and payable upon receipt. Property tax rates can vary widely throughout the state depending on what type of property is being taxed and where the property is located. Property taxes are used to operate local government, make needed improvements, pay for schools and parks and for emergency services such as police and fire departments.
Forfeiture
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Under Michigan law, if either, or both, of the tax bills sent out in December and July remain unpaid as of the first day of March of the following year, they are considered delinquent. The township treasurer then passes the bills over to the county treasurer who begins sending out a series of notices letting the property owner know that the property tax bill is delinquent. Interest is charged on past due bills. If the bills remain unpaid on the following March 1st then the property is forfeited to the county treasurer.
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Foreclosure
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Once the property has been forfeited to the county treasurer, the interest rate increases retroactively and an administrative fee attaches to the bill. If the bill is still is not paid on March first of the following year, the county forecloses on the property. Foreclosed properties are then be sold during a series of three auctions held each July. Profits from the sale first go toward payment of the delinquent taxes. If the property home also had a mortgage on the property, the tax delinquency takes precedence over the mortgage, meaning the owner may lose the property and still owe the bank a considerable amount on the mortgage if the proceeds from the auction are insufficient to pay both, as is often the case.
Possible Resources to Avoid Foreclosure
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Apply for all tax exemptions and credits that may apply. The State of Michigan Property Taxes website provides explanations and application forms for all exemptions and credits. In addition, if you foresee a problem paying the tax bill, you may apply for a deferment (see Resources). Various local, state and non-profit agencies provide financial assistance to Michigan residents who need help paying tax bills. Michigan Legal Services can help with delinquent tax bills (see Resources).
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