How Michigan tax foreclosure auctions work

Forfeiture: the treasurer steps in

Michigan property taxes that go unpaid are returned delinquent to the county treasurer. On March 1, property that has been delinquent for 12 months or more is forfeited to the county treasurer (MCL 211.78g). Forfeiture does not take ownership away. The owner keeps title and can still pay, but interest and fees increase.

The foreclosure judgment and the March 31 deadline

The foreclosing governmental unit, usually the county treasurer, petitions the circuit court to foreclose. After notices and a hearing, the court enters a judgment of foreclosure. The owner, or anyone with a legal interest, can still redeem on or before the March 31 after the judgment. In a contested case the deadline is 21 days after the judgment (MCL 211.78g).

If nobody redeems, absolute title vests in the foreclosing governmental unit on that date, and it gets the right to possession on April 1.

Right of first refusal

Before any auction, public bodies can buy foreclosed property. The state goes first, then the city, village, or township, then the county, then a county authority. They must act by the first Tuesday in July (MCL 211.78m). Prices are the minimum bid or fair market value depending on who buys and whether a former owner has claimed remaining proceeds.

This is why some foreclosed parcels never reach the public auction, particularly in cities with active land banks.

The auctions

Public auctions run from the third Tuesday in July through the first Tuesday in November, with at least 30 days' published notice, and may be held online (MCL 211.78m). Wayne County, which includes Detroit, holds its auctions online in the late summer and fall.

The minimum bid includes all delinquent taxes, interest, penalties, and fees, and may include the costs of the foreclosure and sale. A county that holds more than one sale can run a final auction at least 28 days after the previous one with no minimum bid, though it may set a reasonable opening bid to cover costs. Former owners and interest holders must still pay the full minimum bid to buy back a property.

What happens to unsold property

Property that does not sell is offered to the city, village, or township, which can object. Unless it objects, the property transfers to that local unit by December 30. Otherwise the foreclosing unit keeps it, may transfer it to a land bank, or offers it again (MCL 211.78m).

Remaining proceeds after Rafaeli

In Rafaeli v. Oakland County (2020) the Michigan Supreme Court held that a county cannot keep the surplus from a tax foreclosure sale beyond what was owed. Michigan now lets former owners and other interest holders claim remaining proceeds (MCL 211.78t).

To claim, a person must file a notarized notice on the state form by the July 1 after the foreclosure takes effect, sent by certified mail or personal service. By the next January 31 the foreclosing unit reports the sale result. Claimants then file a motion in the circuit court between February 1 and May 15. Remaining proceeds are what is left after the minimum bid, other foreclosure costs, and a 5% sale commission.

Buyer risks specific to Michigan

Michigan foreclosure auctions include many occupied homes and many vacant, damaged structures. Buyers usually cannot inspect inside. Detroit and other cities enforce rental registration, blight, and demolition rules. Read the treasurer's auction rules for bidder eligibility before you register.

• Drive by or use recent street imagery; condition can be very different from the assessor record.
• Check the city for open blight tickets, demolition orders, and rental registration.
• Check whether the home is occupied and what the eviction process would involve.
• Read the treasurer's auction terms: deposit, payment deadline, and buyer eligibility rules.
• Confirm water and utility accounts; unpaid municipal charges can follow the property.
• Wayne County buyers receive a quit claim deed, so plan for title work before reselling or financing.