Michigan county treasurer reprimanded for foreclosing retiree’s home over $8 tax debt

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Officials at a Michigan county are demanding answers from their treasurer, fearing the county could owe millions of dollars in payments to former owners whose properties were seized under a harsh forfeiture practice.

Oakland County Commissioners sent an angry letter last week to Treasurer Andrew Meisner after the Michigan Supreme Court reprimanded the county’s decision to foreclose on a homeowner’s home after he underpaid his taxes by 8 $.41.

The commissioners said they were forming a special investigative committee to review forfeiture practices and “make recommendations to protect Oakland County ratepayers.”

“It appears that your actions as treasurer to seize the property of an Oakland County retiree for $8.41 have placed the county at serious risk,” said the July 21 letter to Meisner, signed by board chairman David Woodward and commissioners Mike Gingell and Helen Zack, according to the Detroit News.

Meisner did not immediately return Fox News’ request for comment.

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The Michigan Supreme Court’s rebuke centers on the case of Uri Rafaeli, an octogenarian retiree whose 1,500-square-foot home in the Detroit suburb of Southfield was seized in 2014 and then sold for $24,500, the county retaining all income.

While Rafaeli’s case was staggering at the time, it’s not unique: More than 100,000 homeowners in the state fell victim to an aggressive property tax law that Lansing lawmakers passed there. two decades ago. Similar laws have been passed in more than a dozen other states.

Uri Rafaeli had his Michigan property seized, auctioned off and sold after an error in calculating his property taxes left Rafaeli’s account delinquent by $8.41. (Courtesy of the Pacific Legal Foundation)

Law 123 of 1999 was intended to expedite the redevelopment of rundown properties amid Michigan’s economic woes, but critics of the law say it allowed county officials to act as debt collectors and fulfill their coffers by retaining excess revenue generated from the sale of homes with outstanding payments. property taxes – no matter how paltry the debt.

“When the government takes property to settle a debt, they have to return the extra money they make to you,” said Christina Martin, a lawyer with the Pacific Legal Foundation who represented Rafaeli in his case against Oakland County. . year. “No matter what law Michigan passes, they have a constitutional obligation to repay more than they are owed.”

The state Supreme Court ruled earlier this month that while Oakland County had the right to seize Rafaeli’s home to settle the tax debt and “all interest, penalties, and costs,” it wouldn’t. was not entitled to the full value of the house sold.

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“Defendants were obligated to return excess proceeds to plaintiffs, and defendants’ failure to do so constituted a taking by the government under the Michigan Constitution, entitling plaintiffs to just compensation,” wrote the judge Brian Zahra in the 6-1 decision.

Property seized from Uri Rafaeli by Oakland County.  (Google Maps)

Property seized from Uri Rafaeli by Oakland County. (Google Maps)

Oakland County officials — and those in other Michigan counties — now fear the High Court ruling could open the floodgates to litigation as former owners whose properties were seized seek the money from the sale of their foreclosed homes.

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

Michigan Supreme Court Justice Richard Bernstein doesn’t seem to agree with the county attorney’s assessment of the situation.

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“The interpretation you gave was very dramatic: This is going to end the schools, and the counties are going to collapse, and society is just going to implode,” Bernstein said. “You have a situation where someone owed $8 and lost their house. I mean, how fair is that?”

Martin, Rafaeli’s lawyer, had expressed hope that a ruling in favor of Rafaeli would not only be a victory for the retiree, but would set a precedent in Michigan and across the country, which could lead to a US Supreme Court ruling on a similar case. case in the future.

In the United States, 14 other states have laws similar to Michigan’s, and five of those states – Arizona, Colorado, Illinois, Massachusetts and Nebraska – allow private investors to make money on the sale of foreclosed homes.

“Government should not be doing a windfall…when collecting unpaid taxes,” she said last year. “It’s a practice that needs to stop.”

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