Wayne County treasurer sued over foreclosure profit
A New Jersey woman sued the Wayne County Treasurer Tuesday after the office seized her Detroit property over a $144 property tax underpayment and then resold it for $108,000 at the foreclosure auction.
The lawsuit filed in Wayne County Circuit Court argues that Treasurer Eric Sabree violated the owner's federal and state constitutional rights against "uncompensated taking" of property and that the county "unjustly enriched" itself.
Erica Perez, who purchased the property at 2028 24th St. in southwest Detroit with her father on a land contract, said her family got no notice of the foreclosure until September 2017, when it was too late to pay the bill that included $357 in interest and fees.
"The county exploited an accidental underpayment from 2014 to foreclose the property and reap a windfall," the lawsuit reads.
A spokesman for Sabree said the office wouldn't comment on a pending lawsuit that they haven't seen yet. State law allows county treasurers to sell delinquent properties at auction after three years of unpaid property taxes and keep the excess proceeds if the property sells for more.
"The Wayne County treasurer currently, and will always, follow the law," Mario Morrow said.
But the practice is being challenged at the Michigan Supreme Court. Perez is represented by the California-based Pacific Legal Foundation, which has a similar case involving Oakland County that is pending in front of the state Supreme Court.
In that case, Oakland County foreclosed on Uri Rafaeli’s property for $8.41 in tax debt and resold it for $24,500. Another property owner in the case, Andre Ohanessian, owed $6,000 in taxes, penalties, interest and fees on a property that Oakland County foreclosed and resold for $82,000. Oral arguments are expected in early October.
Perez's property included a four-unit building and a single-family home that she and her family were going to live in while they made rental income from the adjacent building. They couldn't afford to buy property in New Jersey and wanted to move to Detroit to start a business and be near family, she said.
“We’ve always believed that if you work hard for something in this country, you can achieve it,” Perez said in a press release. “That’s why this house was so important to us. We were literally trying to live the American Dream.”
Perez and her father spent "many month and tens of thousands of dollars improving" the property, according to the lawsuit.