RAFAELI, LLC v$.$ Oakland County, $952$ NW $2$d $434-$ Mich: Supreme Court $2020$

Justice Zarah

Facts: Rafaeli purchased a rental property in Southfield for $$60,000$ on August $15,2011,$ but failed to pay the $2011$ taxes due on the property in the amount of $$536\mathrm{.}24.$ Defendants mailed Rafaeli notice of the delinquency on June $11,2012.$ Rafaeli sent payment to defendants on August $30,2012,$ yet this payment was insufficient to cover the full amount of the tax delinquency. Defendants mailed a second notice of the delinquency to Rafaeli on September $3,2012,$ and Rafaeli sent another payment to defendants on January $14,2013$; however, even after Rafaeli's second payment, a deficiency of $$8\mathrm{.}41,$ plus $$2\mathrm{.}26$ in interest, penalties, and fees remained on Rafaeli's property. On February $1,2013,$ defendants sent Rafaeli a third notice of delinquency. This delinquency was never paid, and as a result, on March $1,2013,$ Rafaeli's property was forfeited in the amount of the unpaid taxes, interest, penalties, and fees.

Issue: The issue in this case is whether defendants have committed an unconstitutional taking by retaining the surplus proceeds from the tax$-$foreclosure sale of Rafaeli's and Ohanessian's $($collectively$,$ plaintiffs$)$ properties that exceed the amount plaintiffs owed in unpaid delinquent taxes, interest, penalties, and fees under the General Property Tax Act $($GPTA$).$

Held: The defendants' retention of those surplus proceeds is an unconstitutional taking without just compensation under Article $10,2$ of our $1963$ Constitution. Accordingly, reversed the judgment of the Court of Appeals and remanded this case to the Oakland Circuit Court for proceedings consistent with this opinion.

Reasoning: The circuit court granted summary disposition to defendants, finding that defendants did not "take" plaintiffs' properties because plaintiffs forfeited all interests they held in their properties when they failed to pay the taxes due on the properties. The court determined that property properly forfeited under the GPTA and in accordance with due process is not a "taking" barred by either the United States or Michigan Constitution. Because the GPTA properly divested plaintiffs of all interests they had in their properties, the court concluded that plaintiffs did not have a property interest in the surplus proceeds generated from the tax$-$foreclosure sale of their properties.