Class Action Alleges Wayne County, Mich., Officials ‘Abuse’ Foreclosure Process in Recovering Unpaid Property Taxes

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A proposed class action lawsuit alleges elected Wayne County, Michigan officials and County Treasurer Eric R. Sabree have “abused” the process that allows counties in the state to foreclose on parcels of land in order to satisfy outstanding unpaid property taxes.

Rather than foreclosing on a parcel, selling it and then keeping the amount of outstanding taxes plus reasonable fees before returning the rest to the property owner, the defendants instead “foreclose, sell the property at a reduced amount, and keep all of the proceeds and excess/surplus equity for [the county],” the 23-page lawsuit alleges.

As a result of the defendants’ conduct, the complaint alleges, Wayne County property owners lose out on the entire value of their property, which the plaintiff says often amounts to “orders of magnitude more than the outstanding tax bills.” According to the suit, the defendants have violated Michigan law and the Fifth, Eighth and Fourteenth Amendments of the U.S. Constitution.

Per the complaint, the plaintiff’s claims center not on Michigan’s taxation of property but on, more specifically, “what happens after the taxation process is completed and excess or surplus equity remains after each county is paid in full for all delinquent taxes, interest, penalties and fees.” 

With regard to the plaintiff, the lawsuit says Sabree successfully petitioned for and seized ownership of the woman’s property, which had a reported fair market value of $36,600, through a judgment of foreclosure on behalf of Wayne County. On or around November 11, 2014, the defendants sold the plaintiff’s estate to a private buyer for $14,000, the lawsuit states, “far below the fair market value but above the Tax Delinquency.” 

The plaintiff contends she was afforded neither a process, plan, nor legal mechanism by which to seek or gain the return of the equity allegedly seized by Wayne County. 

“Thus, the defendants took or destroyed all of Plaintiff’s Equity in the East State Fair Property,” the suit alleges. “The Defendants refused and refuse to pay just compensation for Plaintiff’s Equity in the East State Fair Property. These Defendants also have failed to provide any mechanism at all for any such compensation.” 

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