Law360 (July 16, 2026, 7:34 PM EDT) -- The Michigan Court of Appeals has affirmed a lower court's dismissal of a suit brought by former property owners seeking the return of surplus proceeds from tax foreclosure sales, saying in a published opinion the property owners did not follow the necessary statutory process when filing their complaint.

Previously, under the General Property Tax Act, local governments could keep all profits from such sales. The Michigan Supreme Court later ruled that the practice was unconstitutional. To manage these claims, the state Legislature established MCL 211.78t, which serves as the exclusive legal mechanism for individuals to recover excess funds.

The plaintiffs, the three-judge panel said in its Wednesday opinion, did not follow the proper statute to recover the excess funds but instead sued Kalamazoo County and its current and former treasurer, claiming their rights were violated under federal and state constitutions and making other state-law claims. Because the plaintiffs used the wrong procedure, the panel affirmed the lower court's dismissal of the suit.

The plaintiffs argued that the state could not impose its process because federal law prohibits the state from adding "administrative conditions" in order for citizens to pursue federally grounded claims and claimed their foreclosure occurred prior to codification of MCL 211.78t. But the panel noted in its opinion that the Michigan statute is retroactive, meaning the plaintiffs are required to follow its procedure.

Plaintiffs' counsel Donald Visser of Visser and Associates PLLC told Law360 that the statute, which was passed after Kalamazoo County "took my clients' surplus proceeds," limits recovery to 95% of what the county took. Under both Michigan and federal constitutions, victims are entitled to 100% plus interest, Visser said, and under the federal statute, the victims are also entitled to their attorney fees.

"The remedy under the statute is inadequate, and the opinion really was about whether the victims had to jump through the hoops of the new statute first before seeking the full relief required under both constitutions," Visser told Law360.

Counsel for the plaintiffs informed the Court of Appeals during oral arguments on June 2 that claims to recover surplus proceeds had been properly filed under the MCL 211.78t statute.

The panel noted in its opinion that its decision in this matter has no bearing on the plaintiffs' new claim properly filed through the required state statute procedure.

Judges James Robert Redford, Randy J. Wallace and Andrew J. Lievense sat on the panel for the Court of Appeals.

The plaintiffs are represented by Donald R. Visser of Visser & Associates.

Kalamazoo County, Mary Balkema, and Thomas Whitener are represented by Douglas J. Curlew of Cummings McClorey David & Acho PLC.

The case is Gerald Armour v. Kalamazoo County, case number 375423, in the Michigan Court of Appeals. 

--Editing by Linda Voorhis.

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