How to Recover Surplus Funds from Tax Foreclosure Sales in Michigan
If you lost a property to tax foreclosure in Michigan, you may be owed money — potentially a lot of it. For years, Michigan counties kept all the proceeds when they sold tax-foreclosed properties, even when the sale price far exceeded the taxes owed. That changed in 2020 with a landmark court decision.
The Rafaeli Decision Changed Everything
On July 17, 2020, the Michigan Supreme Court ruled in Rafaeli LLC v. Oakland County (Case No. 156849) that counties cannot keep surplus proceeds from tax foreclosure sales. The court found that keeping the extra money amounts to "an unconstitutional taking without just compensation." This means if your home was worth $150,000 and was sold to collect $5,000 in back taxes, you have a right to that difference.
Who Can Claim Surplus Funds?
You may be entitled to surplus if you were:
- The owner of the property when it was foreclosed
- A mortgage holder or lienholder
- An heir or legal representative of the former owner
There is a six-year statute of limitations, so sales going back to approximately 2008 may still be eligible for claims.
How to Start Your Claim
Michigan is still developing formal procedures for surplus claims, and the process varies by county. Here is what to do:
- Contact your county treasurer's office. Ask about their process for surplus fund claims following the Rafaeli decision.
- Gather your documents. You will need proof of identity, proof you owned the property at the time of foreclosure, and any other relevant records.
- Consider consulting an attorney. Because Michigan's legal framework is still evolving, having legal help can be important. Look for real estate or tax foreclosure attorneys at martindale.com.
- File your claim according to the county's specific procedures.
Mortgage Foreclosure Surplus
Surplus also exists in mortgage foreclosure sales. Under MCL 600.3135, any surplus from a judicial foreclosure must be brought into court for the benefit of the former owner. Contact the circuit court clerk in your county to inquire. Note that under MCL 567.234, funds held by a court are presumed abandoned after just one year, so act fast.
Important Deadlines
- Six years from the date of the tax sale for constitutional taking claims
- One year for court-held mortgage foreclosure surplus before abandonment
- New deadlines may be established as Michigan enacts new legislation
Do Not Wait
Every day you wait is a day closer to losing your right to this money. Counties are not required to come looking for you.
The $38 Million Post-Tyler Settlement
Following the U.S. Supreme Court's 2023 Tyler v. Hennepin County decision, Michigan reached a $38 million settlement to address surplus proceeds claims. Combined with the earlier Rafaeli decision, this makes Michigan one of the most significant reform states for property owner rights. If you lost property to tax foreclosure in Michigan, you may benefit from these developments.
The Impact of Tyler v. Hennepin County
In Tyler v. Hennepin County (2023), the U.S. Supreme Court ruled unanimously that governments cannot keep surplus proceeds from tax sales beyond what is owed, finding this violates the Takings Clause of the Fifth Amendment. This landmark ruling has strengthened property owners' rights to surplus funds nationwide. As of 2026, laws are evolving rapidly across all states in response to this decision.
Free Help Is Available
AuctionBlock.org is a mission-driven company that helps former property owners recover surplus funds for a flat $4,999 fee upon successful recovery. We can evaluate your case, research county records, guide you through the claims process, and connect you with legal resources if needed.
Do not leave your money behind. Visit auctionblock.org today to find out if you have surplus funds waiting for you.
AuctionBlock.org is a mission-driven company providing surplus fund recovery assistance. This guide is for educational purposes only and does not constitute legal advice. Laws change frequently — always verify current statutes with a licensed attorney in your state. Last updated: April 2026.