MSU Extension MI Money Health

Some homeowners own their property free and clear, meaning they do not have a mortgage loan or other debt. But they still owe local and county property taxes when their summer and winter tax bills are due. If these homeowners are delinquent on paying their property taxes, it may have been caused by unexpected financial hardships, reduced income, or being unaware of the need to pay the taxes until they receive a Notice of Foreclosure from their county treasurer. Several options may help homeowners think through their situation and possibly receive assistance to keep their home.

In Michigan, real property tax delinquency involves a three-year forfeiture and foreclosure process. Parcels are forfeited to the county treasurers when the real property taxes are in the second year of delinquency. Real property taxes which remain unpaid as of March 31 in the third year of delinquency are foreclosed upon by the Foreclosing Governmental Unit (FGU), which is usually the county treasurer’s office. The FGU is responsible for inspecting forfeited property, providing due process notifications and subsequent disposition of the tax foreclosed property. Visit the Michigan Department of Treasury website for more detailed information regarding the real property tax forfeiture and foreclosure process.

What can homeowners with back property taxes do?

1. Contact your county treasurer to let them know you are trying. Talk about a repayment plan and an extension; if you have enough income to start paying regularly. Write down your monthly spending plan with all income and expenses to determine how much you can afford to pay and be prepared when you communicate with your treasurer.
2. Apply for Michigan Homeowner Assistance Fund (MIHAF). MIHAF funds are projected to last until the fourth quarter of 2023. Self-apply or call 211 for assistance with the online application.
3. Contact the Community Action Agency in your county: https://mcac.memberclicks.net/agency-map, to ask if you qualify for any assistance.
4. Contact your county Department of Health and Human Services (DHHS) office to apply for State Emergency Relief (SER) funds if you are at risk of losing your home due to back property taxes, maximum $2,000 lifetime for Home Ownership Services.
5. Call 211 for local referrals.  
6. Do you have any way to increase your income by selling some items of value, taking in a renter, performing part-time work, etc.?
7. You have until March 31 of the third year of delinquent taxes to pay any taxes owed before the county can legally foreclose the property. If you cannot set up a repayment plan and cannot come up with the money, consider selling the property before it is foreclosed on. The real estate market in most Michigan communities is currently very good for sellers.
8. For your current year property taxes, if you have very low income, you can contact your city/township tax assessor to ask about a Poverty Exemption application. Depending on your income, you may qualify for a reduction in property taxes. There will be a Board of Review a few times in a year to review applications. If approved, you will need to reapply every year. This does not automatically renew. Even if denied, you can reapply again the next year.

With these ideas about what you can do to pay back property taxes, explore your options and make a plan. Facing foreclosure is difficult, but understanding the tax foreclosure timeline may help reduce some of the stress. It is important to be realistic when facing foreclosure. Sell your home if you cannot afford to keep it to preserve what assets you can take moving forward. You can contact a MSHDA approved agency such as a Michigan State University Extension housing counselor for free assistance. 

Michigan State University Extension has released the Starting Over After Foreclosure toolkit for homeowners who are experiencing or have previously experienced foreclosure. This toolkit will equip these individuals and families with tools to help them recover their financial stability, in the case that a recovery of their home is not possible. The toolkit is available to download free at the MI Money Health website.

Michigan State University Extension has more information on the MIMoneyHealth website in addition to free webinars on various money management topics.