Losing a property to tax foreclosure can be a devastating experience. However, recent changes to Michigan’s property tax law now allow delinquent taxpayers to recover surplus proceeds remaining after their property is sold at a county tax auction.
Understanding how this process works—and the critical deadlines involved—is essential for protecting your financial rights.
This guide explains what the Revised General Property Tax Act, Section 211.78t means for property owners, how to file a Notice of Intent to Claim a Surplus, and what steps must be taken to ensure you do not miss the opportunity to recover funds you may be entitled to.
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Understanding the Revised General Property Tax Act, Section 211.78t
Section 211.78t was enacted in response to a Michigan Supreme Court decision recognizing that when a county forecloses on property for unpaid taxes and sells it for more than the taxes owed, the former owner has a right to claim the surplus proceeds.
If your property is foreclosed and later sold at auction for more than your delinquent tax balance, you may be entitled to that extra money.
However, under MCL 211.78t, the process is not automatic. Property owners must file a Notice of Intent to Claim Interest in Surplus Proceeds within the time limits prescribed by law. If this notice is not filed on time, the right to any surplus funds is permanently lost.
How the Tax Foreclosure Process Works in Michigan
In Michigan, each county treasurer handles the collection of delinquent property taxes. When taxes remain unpaid for a certain period—typically two years—the county can begin foreclosure proceedings.
Typical Timeline:
- Delinquency Notice: Property taxes become delinquent on March 1 following the year they are due.
- Forfeiture: If unpaid by the following year, the property is forfeited to the county treasurer.
- Foreclosure Judgment: By March 31 of the third year, the circuit court usually enters a foreclosure judgment, transferring ownership to the county.
- Public Auction: The county schedules tax foreclosure auctions, typically held in the summer and fall, to sell the property.
It is at this stage—when you learn your property is scheduled for auction—that you should act quickly to preserve your right to claim any surplus.
Step One: Filing a Notice of Intent to Claim Surplus Proceeds
Once you become aware that your property will be sold at a county tax auction, you must file a Notice of Intent to Claim Interest in Surplus Proceeds with the county treasurer. This alerts the treasurer that you intend to claim any excess funds that may result from the sale.
The deadline for filing varies slightly by county but is generally by July 1 preceding the auction or within a set period after the foreclosure judgment.
Because these deadlines are strict, contact the county treasurer’s office or your attorney as soon as possible to confirm the exact date.
Failing to file on time forfeits your right to recover any surplus funds, even if the sale generates far more than your tax debt.
Step Two: Filing a Motion to Claim the Surplus
After the property is sold and a surplus exists, the county treasurer will notify all parties who filed a timely Notice of Intent.
At that point, you must file a Motion to Claim the Surplus Proceeds in the county’s circuit court within 60 days of receiving notice.
The court will then determine eligibility and allocate funds. If multiple parties file, the court decides how to distribute the surplus.
Timing is critical. Missing this 60-day window means permanently losing your right to claim the funds.
Why Legal Guidance Is Essential
While Michigan law now protects property owners’ rights to surplus proceeds, the process can be complicated. Strict deadlines, county-specific procedures, and precise filing requirements can trip up even the most diligent property owners.
An experienced real estate attorney can:
- Review your tax foreclosure history and confirm eligibility
- Prepare and file your Notice of Intent correctly and on time
- Draft and file your Motion to Claim Surplus Proceeds
- Represent you in court to ensure your rights are protected
The Law Offices of Harry Steven Ellman helps Michigan property owners navigate the foreclosure process, assert their rights under Section 211.78t, and recover funds they are legally owed.
Take Action Before It’s Too Late
If your property is headed to a county tax auction, do not wait until after the sale to act.
Contact the county treasurer or a real estate attorney immediately to determine your deadlines and preserve your right to claim any surplus proceeds.
Time is of the essence—once the deadlines pass, the opportunity to recover your funds is gone for good.
For assistance with filing a Notice of Intent or Motion to Claim Surplus Proceeds, contact:
Law Offices of Harry Steven Ellman
harryellmanlaw.com
📞 Call today to schedule a consultation.