Michigan Tax Foreclosure Sale: What Happens to Your Home — and Your Equity — After March 31

Most Michigan property tax articles stop at March 31 — the date a judgment of foreclosure takes effect and title passes to the county treasurer. For the homeowners who reach that date, that is exactly where the questions start. What happens to the house now? Who sells it? And what happens to the equity that was in it?

Those questions have real answers in Michigan law, and one of them is worth money to thousands of families every year. Since the Michigan Supreme Court decided Rafaeli, LLC v Oakland County in 2020, the county is no longer allowed to keep the profit from selling your home over a tax debt. But the money does not arrive on its own — you have to claim it, and the first deadline is a summer one that most people never hear about.

What a Michigan tax foreclosure sale actually is

The delinquency cycle in the General Property Tax Act (MCL 211.78a–78m) runs three years: taxes turned over to the county treasurer on March 1 of year one, forfeiture on March 1 of year two, and a circuit court judgment in year three with a redemption cutoff of March 31. Every step of that runway, with the notices and hearings attached to it, is mapped out in our guide to the Michigan property tax foreclosure timeline.

If the balance is still unpaid after March 31, title vests in the foreclosing governmental unit — in most cases the county treasurer, not a bank and not a private investor. There is no post-judgment redemption in Michigan's tax process, which is the single biggest difference from mortgage foreclosure, where a redemption period of six or twelve months follows the sheriff sale.

The property is then offered at public auction. In Wayne County those auctions run in September and October of the year the parcel was foreclosed, with a minimum bid built from the delinquent taxes, penalties, interest and fees; parcels that do not sell in September are re-offered in October. Other counties follow a similar late-summer-to-fall pattern, and some sell through the state.

Who gets the money when the house sells

Here is the part that changed. Before 2020, a county could sell a home for far more than the tax debt and keep the difference. In Rafaeli the Michigan Supreme Court held that keeping that surplus is an unconstitutional taking of private property — the debt is the debt, and the rest still belongs to the former owner.

The legislature then built a claims process into MCL 211.78t. In plain terms:

• The sale proceeds first cover the delinquent taxes, interest, penalties and the costs of the sale.
• What is left over — the remaining proceeds — can be claimed by the people who held an interest in the property when title transferred: usually the former owner, sometimes an heir or a lienholder.
• Claims are decided by the circuit court that entered the judgment, not by the treasurer's discretion.

Surplus is not guaranteed. Many parcels sell at or near the minimum bid, especially in soft neighborhoods, and a mortgage or other lien still has to be satisfied. But when a paid-off family home with twenty years of equity is sold over a five-figure tax bill, the difference can be substantial — and Wayne County has publicly reminded former owners that unclaimed money is sitting there.

The two deadlines that decide whether you see it

The process is a two-step one, and the first step is easy to miss:

1. File a notice of intention by July 1. Use Michigan Department of Treasury Form 5743, "Notice of Intention to Claim Interest in Foreclosure Sales Proceeds," and submit it to the foreclosing governmental unit by the July 1 immediately following the tax foreclosure. Miss this filing and the later claim is generally barred, no matter how much equity was in the home.
2. File the motion with the circuit court in the window that follows. After the sale is completed and the treasurer reports the numbers, claimants who filed Form 5743 must file a motion in the same foreclosure case to have the remaining proceeds disbursed. That window opens the following year and closes in the spring, so ask the court clerk or the treasurer for the exact dates in your case file — and calendar them the day you get the answer.

Both steps are paperwork, not litigation, and many former owners handle the notice themselves. Because the amounts can be large and heirs and lienholders may file competing claims, this is one place where an hour with a Michigan attorney or a legal aid clinic is usually worth it. Beware of anyone who contacts you offering to "recover" your money for a large percentage — Michigan's Credit Services Protection Act (MCL 445.1821 and following) bars charging advance fees for that kind of help.

Everything you can still do before the sale is even relevant

Worth saying plainly: claiming surplus proceeds is the consolation prize. The house is gone at that point, and an auction almost never returns what an ordinary sale would. Every route that keeps the home or the full value of it lives on the other side of March 31:

• Pay or arrange the delinquency. Installment and payment plans under MCL 211.78q, the poverty exemption (Form 5737), the treasurer's hardship withholding under MCL 211.78k(4), and in Detroit the HOPE and PAYS programs — covered in our post on Detroit tax foreclosure, HOPE and PAYS.
• Check where your parcel actually stands. Being named in a published notice is not the same as being foreclosed; our walkthrough of the Wayne County tax foreclosure list explains which stage each list represents.
• Sell while you still own it. You hold title until it vests, so you can sell on the open market, pay the county at closing and keep the rest — the arithmetic is in our Wayne County delinquent property tax guide.
• Use the equity to clear the taxes. When the balance is past what a plan will carry but the home holds real equity, the delinquency can be paid off in full from that equity and repaid later from a sale or refinance.

If the sale has already happened

Do three things this week. Pull your case number and the judgment date from the circuit court file or the treasurer's foreclosed-properties list. File Form 5743 if the July 1 following your foreclosure has not passed, or check with the treasurer if you are unsure whether one was filed for you. Then ask the treasurer's office when the auction results for your parcel will be reported, so you know whether there is a surplus to pursue at all.

Then look forward. A tax foreclosure does not follow you the way a mortgage foreclosure does — there is no deficiency judgment chasing you, and because there is no mortgage default attached to it, the hit to your credit is usually far smaller than people expect. Families come out of this, rent for a couple of years, rebuild savings and buy again.

The bottom line

Michigan's tax foreclosure sale transfers the home, but since Rafaeli it no longer transfers your equity. If the sale has happened, the July 1 notice of intention is the one date that protects your claim. And if March 31 is still ahead of you, treat that date as the real deadline — almost everything that keeps a family in its house has to happen before it.

All In Horizon provides asset-based bridge financing. Loan availability, terms, and timing depend on the property, equity position, and exit plan, and are subject to underwriting. This article is educational and is not financial, legal, or tax advice. Nothing here is a substitute for guidance from a licensed attorney.