Michigan retiree's home seized for an $8.41 tax bill - county may be in legal trouble

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Michigan county treasurer rebuked for seizing retiree's home over $8 tax debt

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Officials in one Michigan county are demanding answers from their treasurer amid concerns that the county could be on the hook for millions of dollars in payments to former homeowners whose properties were seized under a tough forfeiture practice.

Oakland County commissioners sent an angry letter last week to Treasurer Andrew Meisner after the Michigan Supreme Court rebuked the county’s decision to seize one homeowner’s house after he underpaid his taxes by $8.41.

The commissioners said that they are forming a special investigative committee to look into the forfeiture practices and "make recommendations to protect the Oakland County taxpayers."

“It appears your actions as Treasurer to foreclose on an Oakland County retiree’s property for $8.41 has exposed the county to serious risk,” the July 21 letter to Meisner, signed by board Chairman David Woodward and commissioners Mike Gingell and Helen Zack, said, according to the Detroit News.

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The Michigan Supreme Court’s rebuke centers on the case of Uri Rafaeli, a retiree in his 80s whose 1,500-square-foot house in the Detroit suburb of Southfield was seized in 2014 and then sold for $24,500, with the county keeping all the earnings.

While Rafaeli’s case was stunning at the time, it is hardly unique: more than 100,000 homeowners in the state have fallen victim to an aggressive property tax law that legislators in Lansing passed two decades ago. Similar statutes have been passed in more than a dozen other states.

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Oakland County officials – and those in other counties across Michigan – are now worried that the high court’s ruling will open the floodgates for litigation as former homeowners whose properties were seized look to get the money from the sale of their seized homes.

During a court appearance last year, William Horton and John Bursch, the county’s attorneys, argued that a ruling in favor of Rafaeli would set a precedent that could ultimately bankrupt Michigan counties by forcing local governments to compensate all homeowners in similar situations. He estimated it would cost around $2 billion.

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There are 14 other states in the U.S. that have statutes on the books similar to Michigan, and five of those states – Arizona, Colorado, Illinois, Massachusetts and Nebraska – allow private investors to make money off the sale of foreclosed homes.

“The government should not be making a windfall ... when collecting unpaid taxes,” she said last year. “This is a practice that needs to come to an end.”

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