Tax foreclosure: payment plans, notice, surplus and appeals in Michigan

Possibly, but it is the county's choice. Under MCL 211.78q(5), a county treasurer may, but is not required to, enter a tax foreclosure avoidance agreement of up to 5 years for a principal residence that qualifies as eligible property, if the owner makes an initial payment the treasurer sets. While it is in effect the property is withheld from the foreclosure petition. If you default, the property goes into the next petition. Ask the treasurer early.

Two tools sit in MCL 211.78q, and both are optional for the county. A foreclosing governmental unit may create a delinquent property tax installment payment plan for eligible property held by a financially distressed person. If that person joins and makes the initial payment, the unit may remove the property from the foreclosure petition. Finishing the plan waives the additional interest under MCL 211.78g(3)(b). Failing it brings that interest back and puts the property in the next petition. Separately, under subsection (5) a county treasurer may enter a tax foreclosure avoidance agreement of up to 5 years for residential real property that is eligible property, meaning a principal residence exempt from the local school operating tax under MCL 211.7cc, if the owner makes an initial payment the treasurer determines. Payments must be regular installments, and the final payment and the final year's installments may not be disproportionately larger. While the agreement is effective, the property is withheld from the petition, the additional interest does not apply, and noncompounded interest at the rate in MCL 211.78g(3)(c) applies instead. That rate is set by statute and can change, so confirm the current figure. The owner must also keep current non-delinquent taxes. A treasurer may refuse an owner who is out of compliance with another agreement or plan and may not enter more than 2 agreements with an owner. If you default, the additional interest applies, the property goes into the next petition, and you may not bid on it at the MCL 211.78m sale. MCL 211.78q was amended by 2026 PA 79, effective July 27, 2026. Eligibility for the installment plan depends on the county's written financial-hardship policy under MCL 211.78h(3)(b), which looks at total household resources against the federal poverty standard or the county's own guidelines, so ask the treasurer about eligibility, amounts, and forms.

Authority: MCL 211.78q; MCL 211.78g(3)(b), (3)(c). Reviewed Oct. 2026.

Generally they are wiped out if the taxes are not paid in time. Under MCL 211.78k(5), if the delinquent amounts are not paid by the March 31 after the judgment (21 days after it in a contested case), the judgment extinguishes all liens, including tax and special assessment liens, and all recorded and unrecorded interests. The listed exceptions include future special assessment installments, certain environmental liens, visible or recorded easements, and private deed restrictions.

Foreclosure under the General Property Tax Act is aimed at clearing title. If the delinquent taxes, interest, penalties, and fees are not paid by the March 31 after the judgment, or within 21 days after the judgment in a contested case, MCL 211.78k(5) has the judgment say that the foreclosing unit has good and marketable fee simple title and that all liens against the property are extinguished, including liens for unpaid taxes or special assessments. A mortgage appears to be among those liens. The lien exceptions are future installments of special assessments and liens recorded by the state or the foreclosing unit under the natural resources and environmental protection act. The same subsection extinguishes all recorded and unrecorded interests, except a visible or recorded easement or right-of-way, private deed restrictions, certain oil and gas interests, interests in property assessable as personal property, and restrictions or other governmental interests under that act. That is why lenders get notice. MCL 211.78i requires the unit to search land title and tax records and to mail notice of the hearings by certified mail to people whose interest was identifiable before the certificate of forfeiture was recorded. A person with a legal interest can redeem under MCL 211.78g(3). A redeeming person other than the owner gets a lien for the amount paid, with the priority of the existing lien or interest, if it is recorded within 30 days (MCL 211.78g(5)). After a sale, an owner or lienholder may claim remaining proceeds under MCL 211.78t, with its own deadlines. Whether the borrower still owes the lender personally is a separate question that this statute does not answer.

Authority: MCL 211.78k(5), (6); MCL 211.78i(2), (6); MCL 211.78g(3), (5). Reviewed Oct. 2026.

Possibly, but the law favors finality. MCL 211.78i requires certified mail, a personal visit to the property, and publication if an address cannot be found, yet a failure to follow a step does not invalidate the foreclosure if the owner was notified consistent with minimum due process (MCL 211.78i(10)). In In re Petition by Wayne Co Treasurer, the Michigan Supreme Court held the bar on modifying judgments unconstitutional as applied to an owner denied due process.

MCL 211.78i sets the notice steps. By May 1 after the forfeiture, the foreclosing unit must start a records search to identify people with an interest in the property. It must send notice of the show cause hearing and the foreclosure hearing by certified mail, return receipt requested, to the address reasonably calculated to reach each person, at least 30 days before the show cause hearing. It must make a personal visit to see whether the property is occupied, try to serve an occupant personally, and otherwise post a plain-English notice in a conspicuous place. If it cannot find an address, it publishes the notice for 2 successive weeks. Missing one of those steps does not by itself void the foreclosure, because MCL 211.78i(10) says non-compliance does not invalidate a proceeding if the person was notified consistent with the minimum due process required by the state and federal constitutions. A judgment is also hard to reopen. Under MCL 211.78k(5)(g) and (6) it generally may not be modified, stayed, or held invalid after the March 31 following judgment (21 days in a contested case), except through an appeal under subsection (7) or a certificate of error under subsection (9). Subsection (9)(e) lets the unit cancel the foreclosure by recording a certificate of error if an owner entitled to notice did not get notice that met minimum due process, unless the property has already been transferred under MCL 211.78m to someone other than the unit. In In re Petition by Wayne Co Treasurer, the notices went to the prior owner and none were posted, and the Supreme Court affirmed an order vacating the judgment and restoring the church's title. That decision does not help an owner who had notice and did nothing. Move quickly.

Authority: MCL 211.78i(1)-(5), (9), (10); MCL 211.78k(5)(f), (5)(g), (6), (7), (9); In re Petition by Wayne Co Treasurer, 478 Mich 1 (2007). Reviewed Oct. 2026.

Tyler v Hennepin County (U.S. 2023) held that a homeowner plausibly alleged a Fifth Amendment taking where the county sold her condo for $40,000 on about $15,000 of tax debt and kept the $25,000 difference. Michigan had a similar rule under its own Constitution from Rafaeli (2020), and the Legislature then created the claim process in MCL 211.78t. In Pung v Isabella County (U.S. June 23, 2026), the U.S. Supreme Court said that, at least when the sale is fairly conducted, the measure is the auction price, not fair market value.

In Tyler v Hennepin County, a Minnesota homeowner had a tax debt of about $15,000. The county sold her condominium for $40,000 and kept the $25,000 difference. The Supreme Court held that she plausibly alleged a violation of the Takings Clause, reasoning that Minnesota's scheme gave the taxpayer no opportunity to recover the excess value once title passed to the state. The case came up on a motion to dismiss. Michigan was already ahead of it. In Rafaeli, LLC v Oakland Co, the Michigan Supreme Court held that a county's retention of surplus proceeds from a tax-foreclosure sale, the amount over the delinquent taxes, interest, penalties, and fees, was an unconstitutional taking without just compensation under article 10, section 2 of the Michigan Constitution. In Schafer v Kent Co (2024), the Court held that Rafaeli applies retroactively to claims not yet final on July 17, 2020, and that MCL 211.78t applies to claims from sales before it was enacted. The Legislature responded with 2020 PA 256, which added MCL 211.78t, and 2020 PA 255, which amended MCL 211.78m. That section says it is the exclusive mechanism to claim remaining proceeds and that the right is not transferable except by will or intestate succession. In Pung v Isabella County, a Michigan tax-sale case the U.S. Supreme Court decided June 23, 2026, the Court restated Tyler as requiring return of the surplus, meaning the difference between the sale price and the tax debt, and held that the measure of just compensation is the actual tax-sale price, not hypothetical fair market value, at least when the sale is fairly conducted. It vacated the Sixth Circuit's judgment and remanded, and it did not decide whether the county's procedures were fair. So Tyler and Pung support the surplus right, but they do not replace the statute's notice and motion deadlines. Those deadlines are in MCL 211.78t(2) and (4).

Authority: Tyler v Hennepin Co, 598 US 631; 143 S Ct 1369 (2023); Rafaeli, LLC v Oakland Co, 505 Mich 429 (2020); Pung v Isabella Co, 609 US 30; 146 S Ct 1964 (2026) (No. 25-95, decided June 23, 2026); Schafer v Kent Co, 515 Mich 1 (2024); MCL 211.78t(11). Reviewed Oct. 2026.

Generally no, under Yono v Ingham County (Mich 2025). The Michigan Supreme Court held there is no compensable taking under the Michigan Constitution when the foreclosing unit tries, in conformity with MCL 211.78m(2), to sell the property at a public auction and it does not sell, because there are no surplus proceeds. The Court separated a different case, Jackson, where the property was never offered at auction.

In Yono v Ingham County, the owner of Lansing commercial property did not pay 2014 and 2015 taxes. The treasurer foreclosed and offered the property at a public auction, it did not sell, and the treasurer deeded it to the land bank for $1. The Michigan Supreme Court, in a per curiam opinion, held there was no compensable taking under Const 1963, art 10, section 2. Under Rafaeli the unit must return proceeds in excess of the delinquent taxes, interest, penalties, and fees reasonably related to the foreclosure and sale. Under MCL 211.78m(2) it cannot sell at a public auction for less than the minimum bid, so a compliant auction that produces no sale shows the unit did not take more than it was owed. The Court contrasted Jackson, where properties transferred to another government for the minimum bid under the former right of first refusal were never offered at auction, and a takings claim could go forward. Yono did not involve an argument that the unit failed to follow the sale statute or acted in bad faith, so the Court did not decide those points. The statute defines remaining proceeds as what was paid for the property less the minimum bid, other fees and expenses, and a 5% commission (MCL 211.78t(12)(b)), so a sale at or below those amounts leaves nothing to claim. Yono involved a foreclosure before the 2020 amendments; the Court said those amendments were not material to its holding and referred to the current statute. If your property was transferred without an auction, take the judgment and the deed to a lawyer.

Authority: Yono v Ingham Co, ___ Mich ___ (2025) (Docket No. 166791, decided July 16, 2025); MCL 211.78m(2), (16)(c); MCL 211.78t(12)(b). Reviewed Oct. 2026.

Yes, but the statute attaches a payment condition. Under MCL 211.78k(7), the foreclosing unit or a person claiming a property interest may appeal the judgment to the Court of Appeals. To appeal, the appellant must pay the county treasurer the amount determined due under the judgment by the March 31 after the judgment (21 days after it in a contested case), together with a notice of appeal. The appeal is on the circuit court record, and the judgment is stayed as to that property.

MCL 211.78k(7) lets the foreclosing governmental unit, or a person claiming to have a property interest under MCL 211.78i, appeal the circuit court's order or foreclosure judgment to the Court of Appeals. The appeal is limited to the circuit court record and is not de novo. The judgment is stayed until the Court of Appeals reverses, modifies, or affirms it, and the stay reaches only the property that is the subject of the appeal. The catch is the payment. The person appealing must pay the county treasurer the amount determined due under the judgment on or before the March 31 immediately following the judgment, or within 21 days after the judgment in a contested case, together with a notice of appeal. The statute then sets refund rules: the amount is refunded if the judgment is affirmed, and separate refund provisions apply if it is reversed or modified. Court rules add their own clock. MCR 7.204(A)(1) gives 21 days from entry of the judgment for a claim of appeal in a civil case, the time limit is jurisdictional, and MCR 7.204(F)(1) requires any deposit that the authorizing statute requires within that time. Because the statutory date and the 21 days can differ, treat the earlier date as the deadline. Redemption by payment is a separate path (MCL 211.78g(3)), and a due-process challenge to missing notice follows different rules.

Authority: MCL 211.78k(7); MCR 7.204(A)(1), (F)(1). Reviewed Oct. 2026.

MCL 211.78t(12)(b) defines remaining proceeds as the amount paid to the foreclosing unit for the property, minus the minimum bid, minus other fees and expenses of the forfeiture, foreclosure, sale, maintenance, repair, and remediation not in the minimum bid, minus a 5% sale commission. The court then sets the relative priority and value of each claimant's interest and orders payment. The unit must pay within 21 days of the order.

The calculation starts with what the foreclosing unit received for the property under MCL 211.78m. From that, the statute subtracts the minimum bid, the other fees and expenses the unit incurred in connection with the forfeiture, foreclosure, sale, maintenance, repair, and remediation that were not in the minimum bid, and a sale commission of 5% of the amount paid (MCL 211.78t(12)(b)). In In re Petition of Montcalm Co Treasurer for Foreclosure (Mich App 2025), the Court of Appeals held that the unit may deduct expenses that could have been in the minimum bid, but that the statutes do not let it recover attorney fees and costs of litigating the disbursement of remaining proceeds. Who gets the money is a court decision. Under MCL 211.78t(8) and (9), the claimant's motion must show the specific basis of the interest, with documents, and affirm that the claimant was not divested of it before the judgment. A lienholder must state the amount owed and its priority. The claimant carries the burden of proof, the court determines the relative priority and value of each interest immediately before the foreclosure was effective, and the order must not unjustly enrich a claimant at the public's expense. If the claimant or its entity bought the property, or still holds an interest when the motion is filed, the order must apply the proceeds to unpaid obligations payable to a tenant and unpaid civil fines for ordinance violations owed when the foreclosure took effect. Every order must also provide for payment of any unpaid tax lien amounts owed by a claimant, if the lien had priority over the claimant's interest, and it bars any further claim by the claimant under the act relating to the property (MCL 211.78t(9)). In Montcalm the trial court treated a bank with a 2007 mortgage as not a claimant because its motion was untimely, and the Court of Appeals affirmed the distribution to the owners. The notice and motion deadlines are in MCL 211.78t(2) and (4).

Authority: MCL 211.78t(8)-(10), (12)(b); In re Petition of Montcalm Co Treasurer for Foreclosure, ___ Mich App ___ (2025) (Docket No. 370785, decided Oct. 20, 2025); MCL 211.78m(16)(c). Reviewed Oct. 2026.