Is Michigan a Tax Deed or Tax Lien State?

Michigan is a tax deed state, not a tax lien state. When property taxes go unpaid in Michigan, the county treasurer forecloses on the property through the courts, takes title, and then sells the property itself at public auction. No private investor buys a lien certificate in between. The state made this switch in 1999, and the process runs under the General Property Tax Act.¹

What the Deed vs. Lien Distinction Actually Changes

In a tax lien state, the government sells a certificate representing the unpaid tax debt to a private buyer. That buyer collects interest while the owner pays off the debt and can eventually foreclose if the owner never does. Michigan used to work that way. The 1999 overhaul flipped the model: the county now handles the entire process from delinquency through sale, and what changes hands at the end is the property, not a debt instrument.¹

For a delinquent owner, that means there is no third-party lienholder to negotiate with. Everything runs through the county treasurer. For an investor, it means you cannot buy Michigan tax liens; the only way in is at the county auction after foreclosure is complete.

The Foreclosure Timeline That Produces a Tax Deed

The process takes roughly two to three years and has fixed statutory dates.

It starts on March 1 of the year after taxes were levied, when any unpaid taxes are returned as delinquent to the county treasurer. Interest and penalties begin accruing immediately.

If the taxes remain unpaid the following year, the property is forfeited to the county treasurer. Forfeiture does not transfer ownership. It gives the county the right to seek a foreclosure judgment.² After forfeiture, an additional noncompounded interest charge of 0.5% per month stacks on top of the base delinquent interest.³

The foreclosing governmental unit, usually the county treasurer, must file a foreclosure petition with the circuit court by June 15 listing every forfeited parcel not yet redeemed.⁴ The court then holds a hearing, notifies interested parties, and enters a final judgment of foreclosure no later than March 30. In uncontested cases, that judgment takes effect on March 31.⁵ Once that date passes, the county owns the property outright.

Redemption Before Title Vests

Owners, mortgage holders, and other interested parties can redeem at any point before the foreclosure judgment takes effect by paying all delinquent taxes, interest, penalties, and administrative fees. The county treasurer has discretion to waive the additional post-forfeiture interest in certain situations, and a payment plan of up to three years may be available for qualifying owners.³

The hard deadline is March 31 following the foreclosure judgment in uncontested cases. In contested cases, the redemption window runs 21 days from entry of judgment.⁵ After that, payment alone will not get the property back.

How the County Sells the Property

Once title vests, the state has the first opportunity to buy. Michigan law gives the state a right of first refusal to purchase any foreclosed parcel at the greater of the minimum bid or fair market value.¹ If the state passes, the county holds public auctions.

Auctions begin on the third Tuesday in July and must conclude before the first Tuesday in November. Sales can run in person, online, or both. The minimum bid at the first auction covers all delinquent taxes, interest, penalties, and fees. Anything unsold moves to a second sale where the minimum bid requirement is dropped, though the county can set a reasonable opening bid to cover its own sale costs.¹ That second round is where investors sometimes pick up properties well below market value.

Many counties also transfer unsold properties to a local land bank authority under Michigan’s Land Bank Fast Track Act. The Detroit Land Bank Authority is the most prominent, and several counties operate their own. Land bank listings and purchase procedures are handled separately from the tax auction.

The Title You Get From a Michigan Tax Deed

One reason the deed model matters to buyers: the statute says the county acquires “good and marketable fee simple title” through the foreclosure judgment, and the deed passes that title along.⁵ The judgment wipes out nearly every prior lien and encumbrance, including mortgages and unpaid special assessments.

A few interests survive. Visible or recorded easements and rights-of-way remain. So do private deed restrictions, certain oil and gas lease interests, and environmental liens recorded under Michigan’s Natural Resources and Environmental Protection Act.⁵ That last carve-out matters for anyone eyeing industrial or formerly commercial parcels. A cleanup lien follows the property.

Even with the “good and marketable” language, many title insurers hesitate to insure tax-foreclosed property right after purchase. The concern is that a former owner might attack the foreclosure on defective notice grounds. Buyers who plan to resell or finance often file a quiet title action first, which adds legal cost and a few months of waiting.

Surplus Proceeds Now Go Back to the Former Owner

For years, counties kept the entire sale price even when it far exceeded the tax debt. That changed with Rafaeli, LLC v. Oakland County in 2020, where the Michigan Supreme Court held that keeping the surplus was an unconstitutional taking under the state constitution. The U.S. Supreme Court reached the same conclusion nationally in Tyler v. Hennepin County in 2023, holding that a government cannot “use the tax debt to confiscate more property than was due” under the Fifth Amendment’s Takings Clause.⁶

Michigan now runs a formal claim process under MCL 211.78t. Former owners file a notarized notice of intention with the foreclosing governmental unit by July 1 following the foreclosure, then file a motion in the circuit court between February 1 and May 15 of the year after the property was sold. Missing May 15 forfeits the claim. The county retains a 5% commission from the sale price before any surplus is distributed, and the court sorts priority among claimants. The statutory motion is the exclusive path, and the right to claim surplus funds is not transferable except through inheritance.⁷

The short version stays the same. Michigan sells deeds, not liens. The county drives the process, and whatever equity was in the property either comes back to the former owner through the surplus claim or ends up in the hands of whoever wins the auction.

1
Michigan Legislature. Michigan Compiled Laws 211.78m – Granting State Right of First Refusal and Sale of Tax Delinquent Property
2
Michigan Legislature. Michigan Compiled Laws 211.78 – Delinquent Taxes, Return, Forfeiture, and Foreclosure of Property
3
Michigan Legislature. Michigan Compiled Laws 211.78g – Forfeiture of Delinquent Taxes
4
Michigan Legislature. Michigan Compiled Laws 211.78h – Petition for Foreclosure
5
Michigan Legislature. Michigan Compiled Laws 211.78k – Petition for Foreclosure, Final Judgment
6
Supreme Court of the United States. Tyler v Hennepin County, Minnesota
7
Justia Law. In Re Petition of Kent County Treasurer for Foreclosure