The practice of erasing property tax debt in Detroit - FOX 32 News Chicago

The practice of erasing property tax debt in Detroit

Posted: Updated:
(WJBK) -

Michael Jaafar of the Jaafar & Mahdi Law Group P.C. in Dearborn tells Fox 2's Murray Feldman that many homeowners in Detroit are participating in the practice of eliminating their tax debts.

Jaafar provides the following information:

There's a loophole in Michigan law that allows home owners to sometimes erase their property tax debt, and unpaid utilities. Millions of tax dollars in the city of Detroit alone are being wiped out each year by people who take advantage of this loophole.

Here's the way it works: when people get behind on their property taxes (it usually takes two years before the treasurer will try to auction it for nonpayment of taxes), then there is an auction in September. At this auction, anyone, including the homeowner, can buy the house back for the mere price of the taxes that are owed. The sad part is that many homes don't even sell for that amount. So there is a back-up auction a month later (the "October auction"). In that auction, whatever was leftover from the September auction sells for any price. The bidding starts at $500 per house.

When a homeowner stops paying their utilities, and taxes, some of the utilities get added to the tax bill. So when they buy their house back at the second auction, they are wiping out most of their liability.

And there is very little risk involved. The risk is that someone else steps up and buys it, because investors scout these auctions. However, there is not a lot of risk of that happening because the homeowner has 30 days to redeem their house anyway. And investors know that. So there is a lot of incentive for homeowner to get behind intentionally, and bank on the fact that no one will want to take a chance on buying their home; and people who make that calculation are by and large correct; here are some reasons why: if you are an investor, you don't want to waste your time with this because you know people will likely redeem, and you tied up your money for no reason; and if people don't redeem, then they may trash the property out of spite; or maybe the property is in very bad condition, which you wouldn't know because you have to buy these properties "sight unseen." many invests avoid doing that.

Some people shun this practice, claiming that it is unfair. And that's understandable. Most people work very hard to pay their taxes, which we all benefit from.

Others defend the practice by claiming that it is the cities fault for not properly assessing their homes value, and asking them to pay more than it's worth. So there are two sides to the story.

Michael Jaafar of the Jaafar & Mahdi Law Group P.C.

23400 Michigan Avenue, Suite 110
Dearborn, MI 48124
(313) 846-6400

(313) 846-3200 (Fax)
www.jaafarandmahdi.com

  • Murray FeldmanMurray FeldmanMore>>

  • More than 600 file lawsuit against GM over ignition switches

    More than 600 file lawsuit against GM over ignition switches

    Wednesday, July 30 2014 4:04 PM EDT2014-07-30 20:04:48 GMT
    Another legal bump in the road for General Motors. Now, a lawsuit has been filed by more than 600 people. They say they had GM cars recalled for faulty ignition switches and suffered injures, or are related to someone who died in a crash. They filed the lawsuit because they say they are not covered in the victims compensation program. Their problems came apparently after the bankruptcy. the law suit was filed in New York.The lawsuit filed Tuesday in U.S. District Court names 29 people who wer...
    Another legal bump in the road for General Motors. Now, a lawsuit has been filed by more than 600 people. They say they had GM cars recalled for faulty ignition switches and suffered injures, or are related to someone who died in a crash. They filed the lawsuit because they say they are not covered in the victims compensation program. Their problems came apparently after the bankruptcy. the law suit was filed in New York.The lawsuit filed Tuesday in U.S. District Court names 29 people who wer...
  • Money Monday: Social media safety

    Money Monday: Social media safety

    Monday, July 7 2014 9:31 AM EDT2014-07-07 13:31:18 GMT
    The internet is like an elephant -- it never forgets. While spoken words leave little trace and are quickly forgotten, written words endure in the online environment. Whatever you post, tweet, update, share -- even if it's deleted immediately afterwards -- has the potential to be captured by someone, somewhere, without your knowledge.
    The internet is like an elephant -- it never forgets. While spoken words leave little trace and are quickly forgotten, written words endure in the online environment. Whatever you post, tweet, update, share -- even if it's deleted immediately afterwards -- has the potential to be captured by someone, somewhere, without your knowledge.
  • Money Monday: No one has a crystal ball on the market

    Money Monday: No one has a crystal ball on the market

    Monday, June 30 2014 10:44 AM EDT2014-06-30 14:44:05 GMT
    Jonathan Citrin of Citrin Group talks about how make investments after so-called experts were flat wrong about predicting how the market will perform.Play the video in the player to see his interview with Murray Feldman.Click here to learn more about the Citrin Group.
    Jonathan Citrin of Citrin Group talks about how make investments after so-called experts were flat wrong about predicting how the market will perform.Play the video in the player to see his interview with Murray Feldman.Click here to learn more about the Citrin Group.
  • Local NewsLocal NewsMore>>

  • Migrant teens from Central America to be housed in Farmington Hills

    Migrant teens from Central America to be housed in Farmington Hills

    Friday, August 1 2014 12:10 AM EDT2014-08-01 04:10:56 GMT
    Illegal immigrant teens from Central America to be housed in Farmington HillsTwenty-four illegal immigrant teens from Central America will soon be housed at Wellspring Lutheran Services in Farmington Hills, which has secured a federal contract. The immigration issue is a major one, and what seemed far, far away is now coming closer and closer to home."We've been watching this for six, eight weeks now, now it's Michigan," said William Largent, president and CEO of Meskwaki. the business arm of...
    Illegal immigrant teens from Central America to be housed in Farmington HillsTwenty-four illegal immigrant teens from Central America will soon be housed at Wellspring Lutheran Services in Farmington Hills, which has secured a federal contract. The immigration issue is a major one, and what seemed far, far away is now coming closer and closer to home."We've been watching this for six, eight weeks now, now it's Michigan," said William Largent, president and CEO of Meskwaki. the business arm of...
  • VIDEO: Witness says man roughed up by Clinton Township police, hospital security

    VIDEO: Witness says man roughed up by Clinton Township police, hospital security

    Thursday, July 31 2014 11:25 PM EDT2014-08-01 03:25:38 GMT
    In a video spreading across social media, a Michigan man says police and hospital security roughed up a man.
    In a video spreading across social media, a Michigan man says police and hospital security roughed up a man.
  • Large two truck crash closes I-75, second accident nearby

    Large two truck crash closes I-75, second accident nearby

    Thursday, July 31 2014 10:57 PM EDT2014-08-01 02:57:29 GMT
    A crash involving two semi trucks shut down I-75 tonight, according to Michigan State Police.
    A crash involving two semi trucks shut down I-75 tonight, according to Michigan State Police.
Powered by WorldNow

205 N. Michigan Avenue
Ground Floor
Chicago, IL 60601
Station Operator: (312) 565-5532
Newsroom: (312)565-5533

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices