One of the latest scams plaguing Oakland County flies so far under the radar that even many judges and attorneys do not fully understand it, much less the average homeowner.
In Michigan, state law provides a rather generous three-year tax foreclosure process. This means that a homeowner can suffer an unexpected financial hardship and still have time to catch up on past-due taxes before foreclosure. It is during this period that these scammers will usually strike.
The typical scammer starts by searching public records for past-due property taxes, focusing on abandoned or unoccupied houses. The scammer then secretly steps in and partially pays the past-due property taxes to stop the foreclosure. Of course paying someone else’s property taxes doesn’t usually raise too many red flags. Mortgage lenders often do this when a borrower falls behind in payments to make sure the mortgage doesn’t get wiped out by foreclosure. The difference between the scammer and the lender is that the lender has a valid claim to the property (the mortgage). The scammer does not and is essentially trying to manufacture a claim to the property.
The rest of the scam plays out like this:
The scammer files a lien with the register of deeds alleging an interest in the property for the value of the taxes paid.
- The scammer files a quiet title or similar lawsuit in circuit court and obtains a court order granting ownership of the property (often by default).
- The scammer files an action in district court to recover possession, obtains an order of eviction, and calls the sheriff to remove any occupants.
The scammer usually forges the proofs of service for the circuit court and district court actions, which means that a victim homeowner won’t know about any of this until the sheriff shows up at the door with a dumpster in tow.
What is particularly devious about this scam is that the lien mentioned above will appear to be valid since there is an apparent underlying debt. This means that even if the scammer is discovered early, the homeowner still has to prove in court that he or she never consented to the tax payment. It should also be noted that this scam has many derivatives, including using the probate court to snatch up the houses of dead people.
Advising clients in these situations can be challenging. After all, apart from closely monitoring their property tax accounts with the city or county, it is hard to guard against this type of scam. However, assuming you end up in court, it will be important to have a thorough understanding of how the scam works in order to save your client’s house.