Wayne County sued for keeping foreclosure sale profits

A class-action lawsuit has been filed against the Wayne County Treasurer's Office, alleging that the county is not adequately refunding residents who lost their homes due to unpaid taxes. This legal battle traces back to 2014, when a case involving a client who lost a property in Oakland County for a mere $8.41 in unpaid taxes led to a significant Supreme Court ruling. The court determined that the government cannot seize excess funds from property sales, which was deemed as government theft. Following this ruling, Oakland County began refunding homeowners affected by tax foreclosures. Despite the precedent set by the Rafaeli v. Oakland County case, Wayne County has reportedly resisted complying with the ruling, prompting further legal action including a federal lawsuit and a civil class action suit. A spokesperson for Wayne County has criticized the ongoing litigation, suggesting that it has become a profit-driven pursuit for some attorneys involved. They also noted that the Michigan Legislature has enacted laws to create a more equitable process for property owners to claim surplus proceeds from tax foreclosures. Currently, Wayne County is appealing a class certification in the Bowlers v. Wayne County case, with arguments scheduled for October 30th. The county has set aside millions to address claims from tax-foreclosed homeowners and plans to enhance public outreach regarding the claims process. The deadline for interested parties to make claims is March 31, 2025, as the county aims to ensure that rightful claimants are informed about their entitlements. The situation highlights ongoing tensions between local governments and property owners regarding tax foreclosure practices, as well as the legal complexities surrounding the distribution of surplus funds from property sales. The outcome of the current litigation could have significant implications for how Wayne County and potentially other counties handle similar cases in the future.