The Michigan Supreme Court has ruled that its 2020 decision preventing local governments from profiting from the sale of foreclosed homes can be applied retroactively. This means that potentially hundreds of millions of dollars could be returned to people who lost their properties due to unpaid taxes. The court found that counties were essentially “stealing” from individuals by keeping excess funds from the sale of foreclosed properties. This practice, known as “home equity theft,” was deemed unconstitutional by the court. The ruling applies to cases that occurred before the decision was made in 2020, potentially impacting tens of thousands of former property owners in Michigan.
Attorneys representing the former property owners argue that the government must pay back the surplus funds obtained from these sales, regardless of the cost. The Michigan Municipal League, which represents local governments, has pushed back against the retroactive application of the ruling, fearing that it could lead to fiscal chaos for communities across the state. They argue that local governments followed the law as it was written at the time and should not be penalized for past actions. The decision has broader implications for other states where similar practices were in place, with the potential for further legal challenges in the future.
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