Michigan’s two largest counties are illegally foreclosing on thousands of properties for delinquent taxes, according to class-action lawsuits filed this month.
Wayne and Oakland counties have both foreclosed on thousands of properties for unpaid taxes in recent years.
But in doing so they’ve denied property owners their due process rights, according to the lawsuits filed in circuit courts for both counties.
Aaron Cox, an attorney for the plaintiffs, says the counties are simply not equipped with the proper infrastructure to deal with the soaring number of tax foreclosures in recent years, and comply with the 1999 state law that lays out how to deal with them.
The complaint hinges on the counties’ failure to provide proper “show cause hearings” to property owners facing foreclosure, Cox says. “The show-cause hearing is supposed to be a hearing. It’s supposed to be a place where a taxpayer can address legal concerns,” like the validity of the tax bill.
But they don’t have that kind of hearing, Cox maintains. “What they do is invite taxpayers to come in, and basically work out a payment arrangement,” he says. “And what it essentially turns into is a strong-arm tactic by the counties to try to collect tax revenues.”
Without a proper legal hearing, “They’re violating every single taxpayer’s constitutional and due process rights. And any foreclosure that takes place after that violation is invalid.”
The lawsuit also claims some property owners weren’t properly notified before their homes went into foreclosure.
And it outlines other alleged constitutional violations, including the right to “just compensation.” The plaintiffs maintain that by seizing properties for delinquent taxes bills (in the case of one Oakland County business, just $8.41) and re-selling it for much more, the counties are illegally pocketing surplus revenues that amount to many times that of the original tax bill.
Oakland County is asking for the case to be dismissed, says Dustin Blitchok, a spokesman for Oakland County Treasurer Andy Meisner.
While the county declined to comment formally on the pending litigation, Meisner maintains that state law only requires an administrative show cause hearing. And the “treasurer’s office goes above and beyond with measures” to contact property owners before initiating forfeiture and foreclosure proceedings, Blitchok said.
In Wayne County, where more than 30,000 properties are still in tax foreclosure just this year, Deputy County Treasurer David Szymanski says the county complies with state law when it comes to notices and procedures — including the right to an administrative show-cause hearing.
“Also one must realize that the tax foreclosure process extinguishes the owner’s interest along with any other interest in the property,” Szymanski said. “If one does not pay the taxes, they lose all interest in the property. That is the legislative method of enforcement of the collection of taxes.
“This lawsuit should be an appeal to the legislature to change the system, but [as] such is fraught with problems.”