How Michigan’s Property-Tax Foreclosure Works (PA 123)

Under PA 123, real-property tax delinquency runs on roughly a three-year forfeiture-and-foreclosure cycle. Here are the stages that matter:

Stage 1 — Delinquency (March 1)

Property taxes that go unpaid become delinquent on March 1 of the year after they were billed, and collection is turned over to the county treasurer (in Wayne County, the Wayne County Treasurer). Interest and fees begin adding up.

Stage 2 — Forfeiture (about one year later)

If the taxes are still unpaid the following March 1, the property is “forfeited” to the county treasurer. Forfeiture is not the loss of your home — but it’s a serious escalation: interest jumps from 1% to 1.5% per month, calculated back to the original delinquency date, and additional fees (often several hundred dollars) are added.

Stage 3 — Foreclosure Judgment (about 13 months after forfeiture)

Roughly 13 months after forfeiture, a court enters a judgment of foreclosure — typically around March of the third year of the cycle. In practical terms, an owner usually has about 25 months from delinquency to pay before ownership is lost. After the judgment and the redemption deadline set by the court (commonly around March 31), title transfers to the county.

Stage 4 — Public Auction

Once the county owns the property, it is typically sold at public auction. This is where the next issue — surplus proceeds — comes in.

The Rafaeli Rule: You May Be Owed the Surplus

What Rafaeli v. Oakland County changed

In 2020, the Michigan Supreme Court ruled in Rafaeli, LLC v. Oakland County that when a county forecloses for unpaid taxes, sells the property, and keeps more than the taxes, interest, penalties, and fees actually owed, keeping that extra money is an unconstitutional taking. In other words, the surplus belongs to the former owner — not the county.

Claiming surplus under MCL 211.78t

The Legislature created a court-supervised process (MCL 211.78t) for former owners and lienholders to claim surplus proceeds, and it comes with firm, unforgiving deadlines — generally a notice of intent to claim by July 1 in the year of foreclosure, and a motion filed with the court within a set window the following year (broadly early February to mid-May), followed by a hearing. Related limitations rules (including MCL 211.78l) can bar claims filed too late, and recent Michigan appellate decisions have tightened how those deadlines are counted.

Don’t rely on the surplus — act before foreclosure

Recovering surplus is complicated, time-limited, and never guaranteed to make you whole. It is almost always better to resolve the taxes or sell the home before foreclosure, so you control the sale price and keep your equity. If your property has already been foreclosed and you think there may be surplus, talk to a Michigan attorney right away — the deadlines are short.

Your Options Before Foreclosure

Sell before the judgment. If you can’t catch up, selling the home lets you pay off the taxes and keep whatever equity remains — instead of losing it at auction.

Set up a payment plan. The Wayne County Treasurer offers delinquent-tax payment arrangements and hardship programs — contact them as early as possible.

Check for exemptions and assistance. Poverty exemptions, the state’s tax-relief programs, and step-forward assistance may apply to your situation.