Counties Refuse to Return Money Taken From Homeowners - Ep. 7.189

welcome once again to lato's law here's steve leto i did a video a while back about a crazy situation in michigan where if you were behind on your taxes the local taxing authority could auction off your house to pay themselves taxes they were owed and then just keep the leftover money and it was a crazy situation but the law allowed them to do that and it was kind of strange but it got the point where some municipalities were actually raising a substantial portion of their money to operate by doing this they built this into their budget so if you owed say a hundred dollars in back taxes and you had a quarter of a million dollar home they'd seize your home sell it to pay themselves 100 and back taxes and then keep the leftover money and just a windfall a surplus so somebody took this case up to the michigan supreme court the michigan supreme court said that's insane you can't do that and basically struck the law down so that raises the question about what about all the people who'd had this happen to them recently their houses sold at foreclosure they paid the taxes with it but then they also lost all of the equity they had in the house so it's happening it's happening finally someone's come around to unwind some of these uh harriet sent me a story from wwmt news channel three mike craftcik wrote it out of kalamazoo michigan foreclosed homeowner's son file suit to force katlamazoo county to pay up on tax sale and the previous video i did i mentioned about how the politicians were all turning on each other all blaming each other for this mess none of them wanted to admit that they liked the idea when it was working or that they were behind the idea when it got passed but in 2019 the kalamazoo county treasurer's office seized william chrisman's home in kalamazoo township for 14 500 of overdue property taxes now he died of cancer in february of this year but his son said his father did fall behind on his mortgage for years and hadn't told anybody so he said we didn't know he hadn't paid the taxes in a while we tried to make payments do whatever we could but it wasn't enough so the property is sold for seventy nine thousand five hundred dollars now remember he only owed fourteen thousand five hundred dollars so there was sixty five thousand dollars left over which the county just kept pocketed the money it's a surplus thank you so that practice would have been legal except that the michigan supreme court ruled in july of this year that counties cannot keep the surplus they get after selling a tax for a close home at an auction without compensating the individual from whom the property is taken and this makes complete sense otherwise people are being deprived of property for no reason i mean you take the property and you sell it i'm talking about the money that's left over portion goes to pay the back taxes why would the surplus also go to the government doesn't make any sense so there was a lawsuit filed in oakland county michigan that challenged one part of michigan's tax foreclosure law so now an attorney who represents this family in kalamazoo sent a letter to the kalamazoo county treasurer uh in october uh requesting that the sixty-five thousand dollars in surplus funds be refunded to the family and as of right now uh they haven't paid that money back so they filed a lawsuit uh the attorney says there's no county that i'm aware of in michigan that's decided they're going to repay the funds and that appears to be the position they're taking it's kind of like we're going to wait and see what happens and if people sue us we'll deal with them on a case-by-case basis so chrisman is now the lead plaintiff on a class action lawsuit by this attorney's law firm and the claims are the kalamazoo county and other michigan counties have been pocketing proceeds from properties that the county forecloses and sells at auction for unpaid property taxes if a judge rules this case can go forward chrisman could represent an entire class of 140 law clients in 38 counties with damages of nearly 7 million dollars according to the firm and that's based on cases between 2016 and 2020 the excess proceeds owed to people whose properties were foreclosed and sold at auction not would available tens of thousands of homeowners the attorney says for many people it was their last asset we have one client that as a result of losing a property is living out of her car now counties that retain profit over the amount of the tax owed without compensating the previous property owners participate in an unconstitutional taking according to the supreme court opinion and most people heard the story immediately thought that like it makes sense that they can get tax money but the other money that made no sense now that law was passed back in 1999 and it allowed county treasurers to pocket the whole sale price of auction properties regardless of the amount of the delinquent tax debts and in case you're curious county treasurers are the ones who collect delinquent property taxes on behalf of the local communities so if you live say in royal oak michigan and you're behind your property taxes the oakland county people who would come after you for that and then of course they're the ones who take the money and keep it the kalamazoo county treasurer said the county generated 1.4 million dollars from property tax foreclosures in 2020 she said she's received dozens of notices demanding repayment of tax foreclosed property sale proceeds the supreme court's decision did not set a deadline for counties to repay property tax owners but as you can imagine the minute the ink was drying on the opinion from the michigan supreme court that money was due that money was doing owing and by the way if you guys are so fast to jump on it when it's in your name why aren't you fast to give it back when it's in someone else's name uh the treasurer for kalamazoo says they're kind of punting it to the legislature for them to make a legislative fix [Laughter] dream on the courts are going to fix this courts are going to fix this right now by way of a big lawsuit that was just served and filed etc etc uh the kalamazoo county treasurer said her office was waiting on a legislative fix before making the reimbursement payments now there have been a couple bills approved in the legislature and under that legislation once a judge determines the amount owed to a claimant the county treasurer would disperse the funds within 21 days anyone interested in property could file a claim for the remaining sale proceeds after required taxes interest penalties and other costs are paid but of course that still requires a judge to make a determination so you have to file a lawsuit to get your money back one of the bills called for a two-year cap of delinquent payments being returned to property owners the current statute of course allows for six years so if a two-year cap got passed then there's a bunch of people who'd lose out critics of course are calling a two-year cap provision unfair i would also like to call it unfair uh the attorney says i think it would be an inappropriate legislative remedy and would probably be challenged in court yeah and you know the counties got all this money over these years it's windfall surpluses free money they sue somebody they get a little bit of money money that they're owed and they take the rest of the money just as a windfall and like i said there were counties that had actually built it into their budget the money we're gonna spend the next year here's what we're gonna get from property taxes we're gonna get from these here's and here's what we get from surpluses from tax foreclosures and they they got the point where they're building that into their budgets and it's kind of like how the police build into their budgets money they get from civil asset forfeiture so that if someone says hey you got to stop doing that they go we're not going to afford to operate anymore well how did you operate before and so how did the counties operate before and the biggest problem and i've said this before is that when politicians have a source of income a revenue stream they hate to see somebody talk about shutting it off but here's one that's been shot off okay the supreme court said you cannot have that money anymore so they got to figure out going forward how they're going to run their counties without this source of income but worse they got to pay back money they got at least for the last two years if that bill gets passed but possibly as far back as six years six years and as this particular lawsuit points out this guy represents people who only are owed seven million dollars and that's one lawsuit but there are other lawsuits and it appears there's been lawsuits filed pretty much in every county in the state of michigan there's 83 counties so it's going to put a dent in a lot of these county's operating budgets to pay this money back but that doesn't mean that you can say okay i guess we can't pay back then yes you can unfortunately you can and so if you go back to 1999 in your heads i remember when this bill got passed that allowed this i remember this and this shows you one of the problems it's not with the legal system per se it's actually a problem with cross between politics and society and how our government works and how our culture works but when the bill got passed in 1999 that said municipalities can foreclose on properties to get their taxes paid and keep the leftover a lot of people looked and said wait that makes no sense and that can't be constitutional right i mean huh and so i remember the debate at the time among attorneys talking about that going that's crazy that's crazy now i practice in the field of lemon law i don't handle tax foreclosure cases so i never even had anybody approach me and ask me about it never never not that but i know other attorneys who have over the years i remember talking to attorneys who said steve are you aware of this law yes i am got passed in 99 it's insane it can't be constitutional and it took 21 years before somebody actually had the right case to take it up to our supreme court and have our supreme court go no that's wrong so there was a law on the books for 21 years that was unconstitutional and now people going back six years should be able to get their money back whether they'll get it back we don't know the legislature might limit it to two years but of course that limitation then can be litigated and the question then becomes the people in the preceding four years would potentially have an argument to go up to our supreme court again and say explain to me why this legislature can cap my ability to get my money back when it's taken from me wrongfully under an unconstitutional statute and so one of the things that people do talk about in the comments below in my videos this comes up a lot is people say how come it takes so long for the supreme court to weigh in on an obviously bad statute and the problem is the way our system works is legislatures pass bills you know how that works just to build up on capitol hill and and then we have an executive branch that signs bills into law or there's other ways that can happen we won't get into that right now and a bill becomes effective the supreme courts both at the federal level and the state level generally speaking don't just look at laws and and render opinions and that just as custom that goes back to the beginning of our court systems because a couple things one is so many laws get passed that they'd be not doing nothing but reviewing laws but number two it's hard to look at some laws and guess where the problems are going to be and i got news for you the blue books behind me are the law books in state of michigan and it's a complete set there's four piles there and the laws can be quite convoluted and i can tell you that i know many people who've read the lemon law in michigan they call me hey steve i got a problem and they described me a problem and they explained to me how they've interpreted the lemon law and they might have a fair interpretation of it but that's not how our courts have interpreted it and so the courts interpret it when it's brought to them with a specific problem they say here's a problem we have how does that fit with the statute but it's extremely hard to simply look at a statute and go oh i see where all the problems are going to be that would be a problem that be a problem that would be a problem so instead they say we're going to wait till people bring us the specific problems now i know what you're going to say steve in this case it was obvious it was obvious it was it was and there have been other laws that get passed where the attorneys immediately go oh there's a problem but as many of you will also point out many legislators are attorneys so many of them must know that these problems are baked into these laws the moment they're passed they must know that i don't know i don't know what to tell you but in this example this law was on the books for 21 years and the michigan supreme court struck it down and said that law is unconstitutional can't do that and now people have had this happen to them at least in the last six years should be lining up to get their money back another reason however might not have been litigated previous to this in case you're curious is the man mentioned of the clients he had some of them had claims for hundreds of thousands of dollars and someone had a claim for as small as 100 bucks 100 bucks so the county owes you 100 bucks i'm not going to give it to you you can sue them guess what the filing fee is in any court in our country they're all over 100 bucks now it's true if you win you might get your filing fee back but do you want to risk 150 filing fee in the hopes of getting your 100 bucks back most people don't especially when the counties have a law department and full-time attorneys on staff whose job it is is to fight your claim so instead of passing a bill saying if you want your money back file a lawsuit and you're capped at two years they should actually pass a bill that says if you took money in a surplus in the last six years notify the people that you took the money from that they've got surplusage coming back to them and work out a process to just pay the money back it's a fair way to do it right so i can dream that's me not speaking as an attorney but just speaking as a person so harriet thank you very much for the story uh from wwmt news channel three mike kratchik wrote it foreclosed homeowner's son file suit to force kalamazoo county to pay up on tax sale and better yet it's phrased it's it's couched as a class action and therefore it could be doing good for a whole bunch of people questions or comments put them below let's talk to later bye-bye thank you for watching lato's law why do you want this job my friend was asked she replied i've always been passionate about not starving to death you

Channel: Steve Lehto

Views: 72,036

Rating: 4.9737515 out of 5

Keywords: lemon law, michigan lemon law, lemon law attorney, lemon law lawyer, http://www.lehtoslaw.com, steve lehto

Id: zHjVo2itV4w

Length: 15min 41sec (941 seconds)

Published: Sun Dec 20 2020