Runestad bill to protect property owners sent to governor

LANSING, Mich. — The Michigan Legislature on Friday finalized a measure sponsored by Sen. Jim Runestad to protect property owners whose property is foreclosed.

Senate Bill 1137 would put an end to proceeds from tax-foreclosed properties being kept by the government instead of being returned to the property owner.

“Often these property owners are seniors, widows or widowers, or people facing an economic challenge or who have recently inherited a property and don’t understand their obligations to pay property taxes,” said Runestad, R-White Lake. “In these uncertain economic times, we could be facing the possibility of increased foreclosures.

“This legislation is a common-sense solution for property owners facing foreclosure. 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.”

SB 1137 is tie-barred to SB 676, sponsored by Sen. Peter Lucido, R-Shelby Township, which was also approved Friday. The two bills together would improve and codify the property tax foreclosure process.

Runestad introduced his bill in response to a situation in Oakland County in 2014 in which officials foreclosed on a property with a tax debt of only $8.41 after the owner, Uri Rafaeli, had made a payment on a current bill instead of paying off an older one. The county then sold the property for more than $24,000.

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

“They shouldn’t also lose out on proceeds that may come from the sale of that property above and beyond what is owed. Rectifying our statute to codify the Rafaeli decision and put in place a mechanism that allows for its implementation is necessary and prudent.”

This past July, the Michigan Supreme Court ruled in favor of Rafaeli in his case against Oakland County.

“I do intend to work next year to give the court more discretion to award equity to a principal property owner going forward in the event they are unable to make a claim on the property in the given timeframe,” Runestad said. “However, it was important to get this process in place to provide property owners with a clear process now.”

SBs 1137 and 676 now head to the governor to be signed into law.