The Michigan Court of Appeals ruled that property owners must follow specific state procedures to recover surplus proceeds from tax foreclosure sales. This decision affects former property owners in Kalamazoo County who claim they lost money during tax-delinquency foreclosures.
The case, Gerald Armour v. Kalamazoo County, was filed on July 15, 2026, under docket number 375423. It centers on allegations that Kalamazoo County improperly retained excess funds from property sales that occurred between 2013 and 2020. The court's ruling clarifies the legal process for recovering those funds and emphasizes the importance of adhering to state law.
The plaintiffs in this case include Gerald Armour, Ronald Lamphere, and several others who lost their properties due to tax-delinquency sales. They argued that the county's retention of surplus proceeds violated their constitutional rights. The dispute arose after the Michigan Supreme Court's 2020 ruling in Rafaeli v. Oakland County, which determined that local governments could not keep surplus funds beyond what was owed in taxes and fees.
Following the Rafaeli decision, Michigan lawmakers amended the General Property Tax Act (GPTA) to establish a process for property owners to reclaim surplus proceeds. This new law, codified as MCL 211.78t, requires claimants to notify the foreclosing governmental unit (FGU) of their intent to seek remaining proceeds within specific timeframes.
In the current case, the plaintiffs filed their complaint without first utilizing the procedures outlined in MCL 211.78t. The Kalamazoo Circuit Court dismissed their claims, stating that the plaintiffs had to follow the statutory mechanism to recover surplus proceeds. The court emphasized that the plaintiffs did not exhaust their administrative remedies under the new law before pursuing their claims in court.
Judge James Robert Redford, along with Judges Randy J. Wallace and Andrew J. Lievense, delivered the court's opinion. The court affirmed the lower court's dismissal, stating, "MCL 211.78t provides the exclusive state law mechanism for persons with claims like plaintiffs present here to recover surplus proceeds." The judges noted that the plaintiffs' failure to follow the required procedures constituted a forfeiture of their rights to recover the funds.
The ruling has significant implications for former property owners across Michigan. It reinforces the necessity of adhering to state law when seeking to recover surplus proceeds from tax foreclosure sales. The court's decision clarifies that the procedures established by MCL 211.78t are mandatory and must be followed to ensure that claims for surplus funds are valid.
This ruling may set a precedent for future cases involving tax foreclosure sales and surplus proceeds. It highlights the importance of compliance with statutory requirements and the potential consequences of failing to do so. The court's decision also aligns with previous rulings that have upheld the constitutionality of the procedures outlined in MCL 211.78t.
Looking ahead, the plaintiffs may have the option to appeal the ruling. However, the court's decision emphasizes the importance of following the statutory procedures, which could limit the grounds for any potential appeal. There are no related cases pending that could directly impact this ruling, but the outcome may influence similar disputes in the future.