By DEBRA HAIGHT
BCR Correspondent
ST. JOSEPH – The date has been set for Berrien County’s auction of tax foreclosed properties after all the delays caused by the COVID-19 pandemic. It will be in late September on Sept. 26 and will be totally online.
In the meantime, officials here and around the state are still mulling how a recent Michigan Supreme Court ruling will affect sales of tax foreclosed properties going forward. The high court ruled July 17 that county governments cannot keep the surplus funds from foreclosure sales after the tax debt is paid.
As for this year’s tax foreclosures, the pandemic led Gov. Gretchen Whitmer to delay the deadline to pay taxes to avoid foreclosure of properties around the state from March 31 to the end of May initially and finally to the end of June. Auctions of such properties normally take place in early May.
Berrien County Treasurer Shelly Weich told Berrien County
Commissioners last week that the 2020 auction will be held Sept. 26. It will be online only and be handled by a third party company called Tax-sale.info. That company is handling foreclosures for 80 percent of Michigan counties.
“It will look different than in other years,” she said. “We would normally have a live auction but due to COVID it will be online only this year.”
Weich reported that 190 properties are on the foreclosure list this year. Of that number, 22 are occupied, 19 unoccupied and 149 are lots. She said bidding can begin up to 30 days prior to the auction and will run live online from 10 a.m. to 7 p.m. on Sept. 26.
People must put down $1,000 credit to preauthorize from the auction with their credit card not charged until the day of the auction. People will be informed by email if they have the winning bid and must pay the amount owed within five business days. If they do not, the $1,000 will not be returned, she said.
She noted that the winning bidder must pay the 2020 summer taxes as well as other expenses owed before they can obtain a property.
A second auction will be held on Nov. 3 for any leftover properties not sold at the Sept. 26 event.
Weich said her office is working to finalize the list of properties and that they should be ready for viewing on the website at the end of this week. The company will be going out and physically posting the properties being foreclosed. They will also be handling all the money transactions.
She did comment briefly on the late July Michigan Supreme Court (MSC) ruling concerning tax foreclosures. She said she and other officials are still trying to determine how that ruling will affect the county and local municipalities. She did say that the county will not be doing any demolitions of auctioned properties this year.
County officials commented on the MSC ruling in July. Community
Development Director Dan Fette told commissioners that excess proceeds from the sales of tax foreclosed properties previously went into the county’s general fund.
In Berrien County’s case, the monies collected were used to pay for the demolition of blighted properties as well as maintain properties that didn’t sell at auction.
“Our demolition fund is pretty much dead in the water,” Fette said in late July. “We used the monies to pay for the demolition of blighted properties and we will not have that money moving forward.”
“It will be a shame, we’ve been aggressive over the last 21 years to demolish blighted properties,” he added. “We have worked with communities to eliminate blight and to promote safety and welfare … It’s disappointing, but that’s where it stands.”
The fund has paid for many demolitions over the years, he estimated the number to be over 1,500 properties. Large projects were also paid for by the fund such as the $1.6 million demolition of the former Mercy Hospital in Benton Harbor.
Fette said then that he and other county officials including Weich are consulting with colleagues around the state to try to determine how the ruling will affect counties moving forward. County commissioners also met with one of the county’s attorneys in closed session in early August to talk about how the ruling will affect pending county court cases.
In the July 17 order, MSC justices unanimously ruled that counties cannot profit from the sales of tax foreclosed properties. They said doing so is unconstitutional and constitutes an illegal taking without just compensation. Governments are required to return surplus proceeds to the former property owners, they said.
One of the specific cases they ruled on came from Oakland County where a property owner lost his property when he mistakenly underpaid his taxes by $8.41. He ended up owing $285 with penalties and interests and Oakland County sold the property for $24,500 and kept the balance of the proceeds.
In making their ruling, the justices relied on principles going back to the Magna Carta. They also noted that state law doesn’t allow a governmental unit all rights and titles to properties being foreclosed on.
“Just as the Magna Carta protected property owners from uncompensated takings, it also recognized that tax collectors could only seize property to satisfy the value of the debt payable to the Crown, leaving the property owner with the excess,” Justice Brian K. Zahra wrote in the opinion.
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