Michigan homeowners fight county over predatory tax foreclosure scheme

Detroit; March 9, 2022: Eight Southfield homeowners filed an appeal in a lawsuit earlier this week to recover hundreds of thousands of dollars in equity they lost when the Oakland County treasurer took their entire homes as payment for tax debts amounting to only a fraction of their home’s value. The County foreclosed on Tawanda Hall’s $308,000 home to satisfy $22,634 in delinquent property taxes and fees. Through a series of transactions, a private company controlled by officials from the City of Southfield to handle foreclosures, profited from the difference.

Southfield took advantage of state law allowing cities to buy foreclosed homes from the county for the cost of tax debt and avoid paying former owners for the difference between the debt and the value of their homes. While this scheme is a boon to some well-connected businesses in the area, it perpetuates the predatory seizure of home equity, which the Michigan state Supreme Court unanimously ruled unconstitutional in Rafaeli, LLC v. Oakland County.

“When the government takes private property, it must pay just compensation, no matter how it acquires the property,” said Pacific Legal Foundation (PLF) senior attorney Christina Martin. “The government has compensated homeowners with forgiveness of debts worth only a fraction of the homes that the government took. That is unconstitutional and unjust.”

A win would close what some Michigan governments have claimed as a loophole to avoid the Michigan Supreme Court’s Rafaeli decision.

The case is Hall v. Meisner, filed in the United States Court of Appeals for the Sixth Circuit.