Ingham, Eaton counties say they're prepared to pay people who lost properties to tax foreclosure

Correction: A property pictured in a photo that initially appeared with this story incorrectly identified the property as having been foreclosed upon. The incorrectly labeled image has been removed.

LANSING — A Michigan Supreme Court opinion issued late last month saying that a 2020 decision applied retroactively and granting former property owners entitlement to profits from tax foreclosure sales won’t be a financial detriment to Ingham and Eaton counties.

Officials in both counties said they have been preparing to pay former property owners the profits collected during foreclosure auctions for years in anticipation of the ruling. Treasurers in Ingham and Eaton counties held on to the windfall from foreclosure sales, banking on the likelihood that it would be returned to the former property owners.

"My best estimate is that we have held on to enough money to satisfy all those claims," Ingham County Treasurer Alan Fox said.

The July 29 Supreme Court decision has been anticipated since the court's 2020 ruling that it was unconstitutional for local governments to keep surplus proceeds from tax foreclosure sales. In the wake of the ruling, guidelines were put in place for former property owners to apply for the profits from tax foreclosure sales beyond what they had owed.

Last month's opinion settled whether people who had lost property to tax foreclosure before 2020 could get the profits from the property's sale.

Both counties set aside funds

Eaton County Treasurer Bob Robinson said lawsuits related to the state Supreme Court's eventual ruling on tax foreclosure profits date back to 2017.

"We didn't even start foreclosing our own properties in Eaton County until 2016, so seeing that writing on the wall with those lawsuits I kept all the auction surplus in a reserve," he said. "We're fortunate in Eaton County that we have a reserve that will pay all those funds back to those who lost their homes in tax foreclosure."

The county has approximately $1.4 million in profits set aside, Robinson said.

Prior to conducting its tax foreclosure auctions, the State of Michigan handled those sales for the county, he said. The state still conducts tax foreclosure sales for properties in Clinton County.

Ingham County has been conducting tax foreclosure auctions since 2005, Fox said.

"We have approximately $4 million set aside," he said. "I don't think we're going to need all of it, but as I said, there's still some loose ends."

It could be another year before people owed funds before 2020 receive them, Robinson said, thanks to several lawsuits filed by property owners. Appeals, including one recently filed after the U.S. District Court of the Western District of Michigan approved a settlement in June regarding Wayside Church v. Van Buren County, a 2014 federal lawsuit involving three property owners who lost their property to tax foreclosure, will likely delay those payments, he said.

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Auctions upcoming

Tax foreclosure auctions in Ingham and Eaton counties are upcoming.

Ingham County's will be held first at 10 a.m. at the Lansing Center on Aug. 22. There are a total of 43 properties up for auction, Fox said. Of those 17 are vacant lots and two dozen are residential structures, he said.

The number of tax foreclosure properties have gone down in recent years, Fox said. In 2023 there were 61 properties for sale at auction and in 2022 there were 71.

Open houses are scheduled at just over a dozen of those properties beginning on Monday.

Find the details for them here , along with a listing of every property for sale.

Eaton County's auction will be held at 5 p.m. at the Eaton County Governmental Complex on Sept. 19. There are a total of 23 properties for sale, Robinson said.

Find the details for the auction here .

Contact Reporter Rachel Greco at rgreco@lsj.com. Follow her on X @GrecoatLSJ .

This article originally appeared on Lansing State Journal: Ingham, Eaton counties say they're prepared to pay people who lost properties to tax foreclosure