The practice of erasing property tax debt in Detroit - FOX 35 News Orlando

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>>

  • 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.
  • A CEO's exit interview: Alan Mulally on his 8-years at Ford

    A CEO's exit interview: Alan Mulally on his 8-years at Ford

    Wednesday, June 25 2014 4:17 PM EDT2014-06-25 20:17:56 GMT
    Five short videos in what could be described as an exit interview to the media.  For business people of all kinds, there is some real insight to be had here as Murray Feldman poses questions that go beyond the auto industry.  Alan Mulally is candid with his answers.
    Five short videos in what could be described as an exit interview to the media.  For business people of all kinds, there is some real insight to be had here as Murray Feldman poses questions that go beyond the auto industry.  Alan Mulally is candid with his answers.
  • Local NewsLocal NewsMore>>

  • Livonia man dies after 2 dogs attack him

    Livonia man dies after 2 dogs attack him

    Thursday, July 24 2014 3:49 PM EDT2014-07-24 19:49:30 GMT
    A 46-year-old Livonia man was killed Wednesday evening after he was attacked by two dogs while jogging in Metamora.
    A 46-year-old Livonia man was killed Wednesday evening after he was attacked by two dogs while jogging in Metamora.
  • Council considering land deal for US-Canada bridge

    Council considering land deal for US-Canada bridge

    Thursday, July 24 2014 3:48 PM EDT2014-07-24 19:48:33 GMT
    The Detroit City Council is considering the transfer of 301 city-owned properties to the Michigan Land Bank in exchange for $1.4 million from the Canadian government as part of plans for a $2 billion international commuter bridge.
    The Detroit City Council is considering the transfer of 301 city-owned properties to the Michigan Land Bank in exchange for $1.4 million from the Canadian government as part of plans for a $2 billion international commuter bridge.
  • Porch shooter: I didn't know gun was loaded

    Porch shooter: I didn't know gun was loaded

    Thursday, July 24 2014 12:48 PM EDT2014-07-24 16:48:56 GMT
    A suburban Detroit man who killed an unarmed woman on his porch immediately suggested to police it was an accident and that he didn't know his shotgun was loaded, according to recorded remarks played in court Thursday.
    A suburban Detroit man who killed an unarmed woman on his porch immediately suggested to police it was an accident and that he didn't know his shotgun was loaded, according to recorded remarks played in court Thursday.
Powered by WorldNow

35 Skyline Drive
Lake Mary, FL 32746

Phone: (407) 644-3535
News Tips: (866) 55-FOX35

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