Novi Times

Legislation that almost unanimously passed the Michigan Senate earlier this month and now is in a state House committee would reign in profiteering by local governments on home tax foreclosures without compensating property owners, one of the bill's co-sponsors said in a news release.

Senate Bill 1137 would end proceeds collections by local governments "instead of being returned to the property owner," Michigan state Sen. Jim Runestad (R-White Lake) said in a news release issued shortly after the measure passed the Michigan Senate.

“This legislation is a common-sense solution for property owners facing foreclosure,” said Runestad, R-White Lake. “It codifies a Michigan Supreme Court ruling and fixes this whole process so that the owner gets their own money back. Government should not be making extra off of the sale of a taxpayer’s home.”

Senate Bill 1137 co-sponsor Michigan state Sen. Peter MacGregor (R-Rockford) | senatorpetermacgregor.com/

The legislation comes in the aftermath of Michigan Supreme Court ruling in Rafaelli, LLC v. Oakland County in July that counties cannot retain sales proceeds above what a property owner owes in taxes, something that Michigan's General Property Tax Act permits. Critics of the practice have called it unconstitutional "home equity theft".

"The Rafaeli case brought to light the injustice that has been happening across this state with excess proceeds from auction sales," Runestad said in his news release. "These individuals have already lost their homes — many times because of a simple mistake."

Homeowners in that situation should not "also lose out on proceeds that may come from the sale of that property above and beyond what is owed," Runestad said in his news release. "Rectifying our statute to codify the Rafaeli decision and put in place a mechanism that allows for its implementation is necessary and prudent."

SB 1137, co-sponsored by Sen. Peter MacGregor (R-Rockford), was introduced into the state Senate on Sept. 22.

On December 3, the bill soundly passed the senate on Dec. 3 with 37 yeas, no nays and 1 excused.

The legislation was received into the house the following day and on Dec. 8 was referred to the House Ways and Means Committee, where it currently resides.

SB 1137 is one of two pieces of legislation aimed at bringing the state into compliance with the Supreme Court's ruling. SB 1137 is tie-barred to Senate Bill 676, sponsored by Sen. Peter Lucido (R-Shelby Township) which also passed the Senate and also is in the House Ways and Means Committee.

"The two bills together would improve and codify the property tax foreclosure process," Runestad said in his news release.