Recently, new state legislation was introduced that would significantly change property tax foreclosures. Right now, counties get to keep everything. So even if you owe just $1 and your house sells for thousands, it’s a big windfall for the county. However, if HB 4219 becomes law, it would ensure that owners of real estate are paid in a foreclosure sale if the sale price exceeds the amount of the unpaid taxes, penalties, and interest.
Naturally, local governments hate this legislation. Tax foreclosures have been a significant source of income for counties in some past years due to the fact that they can keep the entire profit from a tax foreclosure sale. For example, in Wayne County alone in the year 2015, about $180 million in profits was realized by the county from tax foreclosures. That figure has significantly decreased for successive years, but HB 4219 would still affect county finances.
As representatives of community associations, we would like to see HB 4219 amended to allow for payment of community association assessment liens during the tax foreclosure process. Obviously, it would be unfair for owners to profit off a sale while they owe assessments to their community association. The status quo is unfair as well, because currently, association liens are wiped out in tax foreclosures, even if there is money left over and above what the government is owed. That’s why we are taking steps to support amendment of HB 4219 in the House Committee on Local Government and Municipal Finance.
And we need your help! Please contact Committee Chair James Lower and let him know you will support HB 4219 with an amendment to ensure recorded community association assessment liens are paid when excess funds are available in a sale, similar to what is provided in MCL 600.3252 for mortgage foreclosures.
At this time, we also recommend contacting other members of the committee if they represent you (if you’re not sure, find out here):