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BlogsPublications | November 14, 2016
3 minute read

COA holds that property tax foreclosure statute does not usurp Supreme Court’s procedural rulemaking authority

The portions of the property tax foreclosure statute that prevent a circuit court from altering a foreclosure judgment if the owner does not redeem the property do not violate the separation of powers doctrine, said the Michigan Court of Appeals in In re Petition of Tuscola County Treasurer for Foreclosure, No. 328847. Those statutory provisions are substantive, not procedural, and thus do not improperly infringe upon the Supreme Court’s constitutional authority to make rules for practice and procedure.

This case arose from the foreclosure of the property of Jennifer Dupuis (“Dupuis”), who failed to pay property taxes for 2011 and 2012. In 2014, the Tuscola County Treasurer (the “County”) filed a petition of foreclosure for the property, with a hearing set for early 2015. Dupuis received notice of both the petition and the hearing.

On February 2, 2015, following a hearing, the circuit court entered a final judgment of foreclosure on the property. The judgment ordered that the fee simple title would vest on March 31, 2015 and respondent would lose all redemption rights if she did not pay the delinquent taxes before that date. Respondent failed to pay the delinquent taxes by March 31, 2015 and accordingly lost the property.

In August 2015, the circuit court granted Dupuis’s motion to conditionally set aside the judgment of foreclosure under MCR 2.612(C)(1), claiming it had “equitable jurisdiction” to do so. The court ordered the County to convey the property back to Dupuis conditioned upon her payment of delinquent taxes within 10 days.

Under MCL 211.78k, March 31 is the date that statutory redemption rights expire and the fee simple title vests absolutely in the foreclosing governmental unit. The statute adds that the circuit court’s judgment shall not be modified after March 31, and that any appeals must be taken up with the court of appeals. On the other hand, MCR 2.612(C)(1) provides that the circuit court may relieve a party from a final judgment.

Here, the County appealed the court’s grant of relief from the judgment on the grounds that MCL 211.78k barred the court from retaining jurisdiction after March 31. The court of appeals held that under well-settled Michigan Supreme Court case law, the circuit court loses jurisdiction to modify its judgment after the expiration of redemption rights, provided that the property owner received constitutionally adequate notice.

Dupuis cross-appealed, arguing that the sections of MCL 211.78k barring jurisdiction were unconstitutional because they represent the Legislature’s attempt to control procedures established by the Supreme Court regarding entry of a final judgment, which violates the separation of powers doctrine. The court disagreed, holding that the provisions of MCL 211.78k at issue are substantive law, not procedural. Citing Supreme Court precedent, the court reasoned that the statute demonstrates a clear legislative effort to provide finality to foreclosure judgments and to return property swiftly to the tax rolls. Since these considerations are unrelated to the judicial dispatch of litigation, the statute does not violate the separation of powers doctrine. As a result, the court of appeals reversed and vacated the circuit court’s order granting conditional relief from the judgment of foreclosure.