Detroit— Wayne County officials plan to file a lawsuit Thursday to reclaim about 22,700 tax-foreclosed properties that were sold to new buyers who also didn’t pay taxes.
The properties collectively owe more than $80 million and represent more than 78 percent of the 29,000 properties auctioned by county treasury officials since October 2011. The vast majority are in Detroit.
Owners still have time to pay up, but the lawsuit is the latest attempt to end a cycle of abandonment and speculation aided by the treasurer’s October tax auction.
Properties sell for as little as $500 apiece, prompting investors to sit on them or milk homes for rental cash without paying taxes until they are foreclosed again.
“The treasurer realizes there were abuses going on,” said Chief Deputy David Szymanski. “People were ignoring the rules.”
Some buyers promise a fight, saying it is illegal and will stunt redevelopment. Taxpayers generally have three years to pay taxes or lose properties, but the Wayne County treasurer in 2011 added language requiring buyers of properties sold at auction to stay current on taxes.
“Why should someone who is trying to put properties back to productive use … receive less rights than other property owners would?” said Brad Aldrich, a Plymouth attorney who represents bulk auction buyers and is researching potential challenge to the treasurer. “People are going to be less inclined to buy. They might just say, ‘I don’t want to get stuck losing the property.’ ”