Michigan Tax Foreclosure Auctions: The 3-Year Clock and What You Get

Michigan is a pure deed state with a fixed statutory clock

Michigan sells deeds, not liens. Under the General Property Tax Act as rewritten by Public Act 123 of 1999 (MCL 211.78 and following), there is no tax lien certificate to buy, no interest rate to bid down, and no investor standing between the county and the delinquent owner. The county treasurer, acting as the foreclosing governmental unit, forecloses through the circuit court and then sells the property at auction.

The timeline is roughly three years from the tax year and about two years from the point taxes go delinquent. It runs on calendar dates rather than on notices, which is what makes it so much faster than judicial foreclosure states.

• •March 1: unpaid local taxes are returned delinquent to the county treasurer, adding an administrative fee and monthly interest.
• •March 1 of the following year: the property forfeits to the county treasurer. Forfeiture is not foreclosure, but interest jumps to 1.5 percent per month retroactive to the delinquency date, plus a substantial fee.
• •February or March of the third year: the circuit court enters a judgment of foreclosure.
• •March 31: the redemption deadline. After it passes, absolute title vests in the treasurer and the former owner cannot pay to get the property back.

What actually happens on March 31

In most states redemption is a window that follows the sale. Michigan inverts that. Redemption ends before the auction, so by the time a parcel appears on a bidder list, the former owner has already lost every right to reclaim it by paying.

This is genuinely good news for investors and it is the single most misunderstood feature of Michigan. You are not buying a claim that might be redeemed out from under you in six months. You are buying property the county already owns outright. The tradeoff is that the county has absorbed all the redemption risk and prices its opening bids accordingly.

What the foreclosure wipes out, and what it does not

The judgment of foreclosure extinguishes most prior interests, including mortgages, judgment liens, and land contracts. That is why Michigan attracts investors who have been burned by states where the deed conveys subject to encumbrances.

It is not a universal solvent. MCL 211.78k(5) expressly preserves several categories of interest, and each one is a place where a bidder can get hurt.

• •Visible or recorded easements and rights-of-way survive the foreclosure.
• •Recorded deed restrictions and restrictive covenants survive.
• •Rights preserved by federal law survive, most importantly the IRS right to redeem within 120 days after the sale under 26 U.S.C. section 7425(d) when a federal tax lien was on the property.
• •Environmental liability does not disappear because the tax debt did. A contaminated commercial parcel is still a contaminated commercial parcel.
• •Occupants are still occupants. The deed does not evict anyone; you file for possession yourself.

The auctions: minimum bids, premiums, and the second sale

Most counties hold the first auction in mid-to-late summer, commonly July through September, with a minimum bid set at the taxes, interest, fees, and sale costs. Many counties run these online through a shared vendor platform rather than in a courthouse room, so the practical barrier to entry is low and the competition is national.

Parcels that do not sell typically roll to a second auction in the fall, where the minimum bid is often reduced or waived entirely. That is where the famous hundred-dollar Michigan parcels come from, and also where the worst inventory lives. A property that no one would buy for the back taxes has usually told you something true about itself.

Budget above your bid. Counties commonly add a buyer premium in the range of ten percent, plus recording and deed fees, and payment windows are short. Note also that not every county runs its own sale; some parcels move to the state land bank or other agencies instead.

Who is not allowed to bid in Michigan

Michigan is unusual in policing the bidder pool. Under MCL 211.78m, a person is ineligible to bid if they hold an interest in property with delinquent taxes, if they had property foreclosed for delinquent taxes within the preceding three years, or if they have unpaid blight or code violations. The rule reaches affiliated entities, so forming a new LLC does not reliably launder a disqualification.

Treasurers do enforce this, and a sale to an ineligible bidder can be set aside after the fact. If you own anything in Michigan, clear your own delinquencies before registering.

Surplus proceeds after Rafaeli and Tyler

Michigan is the state that changed the national conversation on surplus funds. In Rafaeli, LLC v. Oakland County (2020), the Michigan Supreme Court held that a county keeping sale proceeds beyond what it was owed had taken private property under the Michigan Constitution. The U.S. Supreme Court reached the same conclusion under the federal Takings Clause in Tyler v. Hennepin County (2023), which extended the principle nationwide.

Michigan responded with a claims process now codified at MCL 211.78t. It is strict and it is deadline-driven. The former owner must file a notice of intention to claim the proceeds with the foreclosing governmental unit by July 1 of the year of the sale, and then bring a motion in the circuit court during a defined window the following year. Miss the July 1 notice and the claim is generally gone regardless of how much equity was lost.

For investors this cuts two ways. It means the county has no incentive to overbid your parcel into oblivion, and it means the surplus recovery field in Michigan is a real, statutory, calendar-driven business rather than a gray area.

Do the diligence the auction platform will not do for you

Michigan deeds are typically quit claim, title insurers are usually unwilling to write on a fresh tax deed, and quiet title is the normal path to a marketable, financeable, resellable asset. Price that in from the start rather than discovering it at closing.

Then look at everything the minimum bid does not tell you: whether a recorded easement cuts the buildable area, whether there is a federal tax lien that gives the IRS 120 days to take the property back at your price, whether the parcel sits in a FEMA flood zone that makes the insurance math impossible, whether the structure is already tagged for demolition.

TaxDeedIQ scores exactly that. Every opportunity carries a 0 to 100 Safety Score that itemizes what can go wrong in plain language rather than burying it in a PDF, and the Deal Analyzer runs the numbers with those risks attached instead of pretending the minimum bid is the price. Check the score, then decide. Evaluate the risk before you bid.

Michigan Tax Foreclosure Auctions FAQ