Disclaimer: This is general information, not legal advice. I am not a lawyer. For advice about your specific situation, consult a licensed Michigan attorney.
Overview — Who can get surplus funds after a Michigan tax sale?
When a property is sold at a tax sale, the county sells the property to satisfy unpaid taxes, interest, penalties, and the county’s sale costs. If the sale brings in more money than the amount owed, the extra money is called surplus funds (sometimes called overage). In Michigan, people or entities with a legal interest in the property on the date of sale — typically the former owner and certain lienholders (for example, recorded mortgages or judgment lienholders) — are the parties who may claim those surplus funds.
Step-by-step process to recover surplus funds in Michigan
1. Confirm that a surplus exists and who holds the funds
- Check the county treasurer’s or county clerk’s sale records. Counties keep records of tax sales and the sale proceeds.
- If the sale produced proceeds above the total of taxes, interest, penalties and sale costs, the county normally holds the surplus until a lawful claimant is identified and paid.
2. Identify whether you have a right to claim
- Priority for the surplus typically follows the property’s recorded interests at the time of sale. The former owner commonly has a primary claim. Junior lienholders (second mortgages, judgment liens) may also claim if their liens survived the tax sale.
- Check the property’s chain of title and recorded liens at the county register of deeds to see who had interests when the tax lien existed and when the sale occurred.
3. Gather the documentation you will need
- Proof of identity (government ID).
- Proof of property interest: recorded deed, mortgage, assignment, or an abstract/title report showing your interest on the date of the tax sale.
- Copy of the official tax sale record or sheriff’s deed showing the sale and the amount realized.
- Any court orders or prior notices related to the tax sale or foreclosure.
4. File a claim with the appropriate office
Where to file depends on how the sale was handled in your county:
- County treasurer or county clerk — Many counties require claimants to submit a written claim or application to the county treasurer’s office (or other local office that conducted the sale) with supporting documents.
- Circuit court — In some situations, particularly when competing claims exist, a claimant must file a court action (a petition or motion in the circuit court) asking the court to determine entitlement and order distribution of the surplus.
5. If there are competing claims, follow the court process
If more than one person claims the surplus (for example, the former owner and a mortgage holder), the county may not release funds until the court resolves who is entitled. Expect written claims, notices, and possibly a hearing in the county circuit court where the sale took place.
6. Distribution and payment
Once the county treasurer or the court determines the legitimate claimant(s), the county will distribute the surplus according to that determination. The funds will be sent to the person or entity awarded the surplus, minus any lawful administrative costs or other statutorily authorized deductions.
Important timing and deadlines
Act quickly. Different rules and deadlines can apply depending on the type of sale and local county procedures. Waiting too long can allow the county to treat the money as unclaimed and move it according to state unclaimed property rules, or you may lose priority over other claimants. Contact the county treasurer and review local sale notices immediately after a tax sale.
Where to look in Michigan law and government resources
- Michigan Legislature (General Property Tax Act and related statutes): https://www.legislature.mi.gov — search the Michigan Compiled Laws (MCL) for Chapter 211 (General Property Tax Act) and related sections that govern tax sales, procedures, and priorities.
- Michigan courts (information on foreclosure, claims, and filing court actions): https://courts.michigan.gov
- Your county treasurer’s office and county register of deeds — each county maintains sale records and specific claim procedures.
Common complications
- Competing lienholders: Mortgagees and judgment lienholders may have competing rights to surplus proceeds.
- Disputed title or ownership: If ownership was contested or unclear at the time of sale, resolving entitlement can require litigation.
- Administrative delays or missing records: Older sales or incomplete records can complicate proof of entitlement.
- Escheat/unclaimed property: If no timely claimant comes forward, counties or the state may have procedures to treat the funds as unclaimed property.
Practical tips — Helpful Hints
- Contact the county treasurer immediately after learning of a tax sale; ask their exact procedures and forms for claiming surplus funds.
- Obtain certified copies of sale documents and of recorded title documents from the register of deeds.
- If you are a mortgage or lienholder, confirm whether your lien was preserved and whether you need to file a separate claim.
- Keep records of all communications, copies of notices, and receipts relating to the taxes and sale.
- If multiple parties claim the funds, be prepared to file a petition in circuit court and to present documentary proof of your priority.
- Consider hiring a real property attorney if the amount at stake is significant, if competing claims exist, or if you need help preparing court filings.
- Check for state or county deadlines about unclaimed property so you don’t miss a statutory period that could change how the funds are distributed.
If you want, I can help you find your county treasurer’s contact information and the specific forms or steps that county uses for surplus-claim filings.