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Michigan State University
Michigan State University

Alvin L. Storrs Low-Income Taxpayer Clinic

 

Michigan homeowners who owe back property taxes have options!

 

by Mitchell Purdy

Posted: 4/26/2021; Updated 5/2/22

Under Michigan law, delinquent property tax can result in the foreclosure of one’s home. It is important to understand the foreclosure process to avoid losing your home, as well as being aware of the different sources of assistance should you find yourself facing possible foreclosure due to delinquent property tax.

The foreclosure process takes three years, though the real property is regarded as forfeited to the country treasurer if the tax goes unpaid for two years. By March 31st of the third year, if the property tax remains unpaid, the property is foreclosed upon by the Foreclosing Governmental Unit (FGU). The FGU is then responsible for inspecting the forfeited property, providing due process notifications to the owners, and subsequent sale of the tax foreclosed property. Given this process, property owners who are behind in paying their real property taxes have until March 31st of the third year after their property tax was due to pay the tax before their property will be foreclosed upon and sold.

If you are facing the possible foreclosure of your property due to delinquent real property tax, it may be possible to negotiate a payment plan with your county treasurer to resolve the delinquent tax. However, if the treasurer of your county is unwilling to set up payment plans, or if you do not have the means of paying the requested monthly rate (which is not a set rate, as county treasurers are generally not required to accept payment plans), there are additional resources to assist you. These resources take the form of both state and non-state assistance.

A notable state assistance program for preventing the loss of one’s home is to apply for State Emergency Relief (SER) funds from the Michigan Department of Health and Human Services (MDHHS) through the SER program. Through this program, one may qualify for up to $2,000 maximum lifetime assistance. Apply through your county’s MDHHS office, which you can locate at https://www.michigan.gov/mdhhs/0,5885,7-339-73970_5461---,00.html. Alternatively, you can call (313) 456-1000 to locate the nearest office.

A notable non-state source for assistance is the Community Action Agency in your county. These organizations have several resources to assist indigent individuals, some of which include assistance with delinquent real property tax. To locate your county’s Community Action Agency, just go to https://mcac.memberclicks.net/agency-map and review the agency’s resources to see if they may be able to help you.

Depending on your circumstances and location, if none of the above options are available to you, your county or municipality may have its own resources to assist you. Examples of these locality-specific resources include the Pay As You Stay (PAYS) program in Wayne County. The PAYS program may reduce the amount of delinquent taxes owed for lower income homeowners who qualify for a Poverty Tax Exemption from their municipality. While the PAYS program is based on state law and is therefore potentially available to anyone who qualifies for the program in the state, the state law has a discretionary provision, and not all units of local government opt-in to this program.

A clearer example of a local organization helping individuals stay in their homes is the United Community Housing Coalition, which aims to help Detroit residents avoid foreclosure due to unpaid property tax.  https://www.uchcdetroit.org/.

Below are links to previously mentioned and additional resources that may assist individuals with delinquent real property taxes. 

Suggestions from Michigan State University Extension:

  • Contact your county treasurer to let them know you are trying. Talk about a repayment plan and an extension; if you have enough income to start paying regularly. Write down your monthly spending plan with all income and expenses to determine how much you can afford to pay and be prepared when you communicate with your treasurer.
  • Contact the Community Action Agency in your county: https://mcac.memberclicks.net/agency-map, to ask if you qualify for any assistance. Most received some C.A.R.E.S. Act funds in mid-2020 which can help with property taxes.
  • Contact your county Department of Health and Human Services (DHHS) office to apply for State Emergency Relief (SER) funds if you are at risk of losing your home due to back property taxes, maximum $2,000 lifetime for Home Ownership Services.
  • Call 211 for local referrals.  
  • You have until March 31, 2021 to pay any 2018 taxes before the county can legally foreclose the property. If you cannot set up a repayment plan and cannot come up with the money, consider selling the property before it is foreclosed and taken. The real estate market in most Michigan communities is currently very good for sellers.

State of Michigan Resources:

  • PAYS (Pay As You Stay)
    “Pay As You Stay (PAYS) may reduce the amount of delinquent taxes owed for lower income homeowners who qualify for their city's, township's, or village's Poverty Tax Exemption (PTE).” It is a discretionary provision, and not all municipalities “opted-in.”
  • Michigan Department of Human Services
    Offered through the State Emergency Relief (SER) program. Lifetime maximum assistance is $2,000. Call (313) 456-1000 to locate the nearest office.
    https://www.michigan.gov/mdhhs/0,5885,7-339-71547_5531_62133---,00.html
  • Step Forward
    Although Step Forward no longer accepting new applicants, but has a number of resources that may be helpful at: https://www.stepforwardmichigan.org/en/resources/

Ingham/Eaton Counties - https://www.holdontoyourhome.org/

Wayne County & Detroit Resources:

https://detroitmi.gov/departments/office-chief-financial-officer/pay-you-stay

2022 Poverty Exemptions from Property Taxes
If you are low-income, you can contact your city/township tax assessor to ask about a Poverty Exemption application for this year’s property taxes. Depending on your income, you may qualify for a reduction in property taxes. There will be a Board of Review a few times in a year to review applications. If approved, you will need to reapply every year. This does not automatically renew. If you are denied, you can appeal your denial to the Michigan Tax Tribunal.  A denial does not prevent you from qualifying in next year (or thereafter). Unfortunately, you cannot claim the poverty exemption for prior years. See our page on applying for a Michigan Poverty Exemption