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Michigan Supreme Court to decide if counties can profit from foreclosures

An old house with a foreclosure sign in the yard
Steve Carmody
Michigan Radio
The Michigan Supreme Court willl decide whether counties' practice of keeping proceeds from the sale of foreclosed properties is unconstitutional.

In the new year, the Michigan Supreme Court will decide whether counties can continue to hit the jackpot when foreclosing on properties.

Counties routinely sell real estate when taxes are long overdue. State law allows them to pocket everything - even if the sales price exceeds the amount of debt. The Supreme Court has agreed to consider whether it's an illegal government taking under the Michigan and U.S. Constitutions.

Because of a mistake, Uri Rafaeli owed less than $9 on a rental property in Southfield. The bill grew to $285 with penalties and interest. Oakland County sold the house for $24,500 but refused to give him a dime, although the sale exceeded the overdue taxes.

In defense, Oakland County says it didn't take property. Rather, it claims Rafaeli forfeited it.

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