By Zach Gorchow
Gongwer News Service
New attempts from property owners to recoup foreclosure proceeds from the government cannot survive statute of limitations requirements despite a 2019 Supreme Court ruling barring governments from keeping foreclosure proceeds and a 2024 ruling giving the decision retroactive effect, the Michigan Court of Appeals has ruled.
The plaintiffs in the case sued in 2024 and 2025 in the Livingston Circuit Court over surplus proceeds the Michigan Department of Treasury obtained after foreclosing upon their property and selling it in 2014.
The Livingston Circuit Court ruled for the plaintiffs, requiring Treasury to pay one of them the proceeds generated by the property sales and denying Treasury’s motions to dismiss the other cases.
Court of Appeals Judge Michelle Rick, in a published decision, reversed the lower court, holding that the petitioners’ claims from the 2014 sales expired in 2017. Rick, ruling in the case In re Petition of State Treasurer for Foreclosure of Unpaid Tax (COA Docket No. 376481), noted the Supreme Court had made clear that while the Rafaeli decision barring governments from keeping foreclosure sale proceeds was made retroactive in the Schaefer decision, claims prior to Dec. 22, 2020, were not revived.
The property owners argued their claims accrued in 2024 when the Supreme Court ruled in Schaefer to make Rafaeli retroactive.
“Here, respondents’ properties were sold in August and September 2014 for amounts exceeding the taxes owed,” Rick wrote. “When petitioner retained the resulting surplus proceeds, respondents were deprived of the compensation to which they were constitutionally entitled. The elements of an inverse-condemnation claim were complete at that time because the government retained property belonging to respondents without just compensation. Accordingly, respondents’ claims accrued in 2014.”
Judge Anica Letica and Judge Stephen Borrello signed the decision.
Gongwer News Service
New attempts from property owners to recoup foreclosure proceeds from the government cannot survive statute of limitations requirements despite a 2019 Supreme Court ruling barring governments from keeping foreclosure proceeds and a 2024 ruling giving the decision retroactive effect, the Michigan Court of Appeals has ruled.
The plaintiffs in the case sued in 2024 and 2025 in the Livingston Circuit Court over surplus proceeds the Michigan Department of Treasury obtained after foreclosing upon their property and selling it in 2014.
The Livingston Circuit Court ruled for the plaintiffs, requiring Treasury to pay one of them the proceeds generated by the property sales and denying Treasury’s motions to dismiss the other cases.
Court of Appeals Judge Michelle Rick, in a published decision, reversed the lower court, holding that the petitioners’ claims from the 2014 sales expired in 2017. Rick, ruling in the case In re Petition of State Treasurer for Foreclosure of Unpaid Tax (COA Docket No. 376481), noted the Supreme Court had made clear that while the Rafaeli decision barring governments from keeping foreclosure sale proceeds was made retroactive in the Schaefer decision, claims prior to Dec. 22, 2020, were not revived.
The property owners argued their claims accrued in 2024 when the Supreme Court ruled in Schaefer to make Rafaeli retroactive.
“Here, respondents’ properties were sold in August and September 2014 for amounts exceeding the taxes owed,” Rick wrote. “When petitioner retained the resulting surplus proceeds, respondents were deprived of the compensation to which they were constitutionally entitled. The elements of an inverse-condemnation claim were complete at that time because the government retained property belonging to respondents without just compensation. Accordingly, respondents’ claims accrued in 2014.”
Judge Anica Letica and Judge Stephen Borrello signed the decision.
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