Tax foreclosure; The General Property Tax Act (GPTA); The Takings Clause of the Michigan Constitution (Const 1963, art 10, § 2); Rafaeli, LLC v Oakland Cnty; MCL 211.78t (procedure governing claims for surplus proceeds); Whether a “taking” occurs when property was not offered for sale at a public auction but instead purchased by another governmental unit for a minimum bid via the right-of-first-refusal process outlined in former MCL 211.78m; Retroactivity of the amended MCL 211.78m & 211.78t; Schafer v Kent Cnty; Hathon v Michigan; LaFontaine Saline, Inc v Chrysler Group, LLC; Foreclosing governmental unit (FGU)

The court held that the Michigan Constitution’s Takings Clause is violated “when there are no surplus funds from a public auction but instead the government obtains surplus value from foreclosed properties that were transferred between governmental units for the minimum bid under the right-of-first-refusal process set forth in former MCL 211.78m without ever offering the property for sale at a public auction.” It reaffirmed its ruling in Hathon that the amended MCL 211.78t “applies retroactively to claims that preceded its enactment, but” it concluded that it did not apply here. Lastly, it held that the amended MCL 211.78m only applies prospectively. Thus, it affirmed the Court of Appeals’ judgment in part, reversed in part, and remanded to the trial court. Plaintiffs’ “properties were foreclosed on through the GPTA—before Rafaeli was decided—and sold for the minimum bid to another governmental unit through the right-of-first-refusal procedure established by former MCL 211.78m,” without being offered for sale at a public auction. The court agreed with “the Court of Appeals to the extent that it held that this constituted a taking under” Michigan’s Takings Clause. There was no possibility here “of surplus proceeds from a foreclosure sale because the properties were never placed for public auction and the statute restricted [defendant-]City’s purchase amount upon exercise of its right of first refusal to the ‘minimum bid.’ Accordingly, there was no opportunity for the FGU to receive, let alone retain, any surplus funds.” The court found that despite “this distinction, the same principles that underpinned [its] decision in Rafaeli hold true” here. It concluded that “where, as here, there are no sales by public auction, the government commits a taking if the value of the property retained exceeds what the government was owed.” The court then considered the retroactivity of MCL 211.78m and 211.78t. The latter’s plain language was “a clear manifestation of the Legislature’s intent that the provision apply retroactively.” But because it did “not provide plaintiffs with any possibility of relief,” the statute did “not govern this dispute and claimants should proceed through standard processes of inverse condemnation, separate from the statutory process of MCL 211.78t.” The court disagreed with the Court of Appeals’ determination that the current version of MCL 211.78m applies retroactively. Given the lack of any language in the statute indicating the Legislature intended it to do so, “and the fact that retroactive application . . . would create new duties” as to completed transactions, the court held that it applies only prospectively to claims accruing on or after 1/1/21.

Concurring, Justice Welch agreed with the “holding that a taking requiring just compensation occurred in this case and with the” resolution of this appeal. She wrote separately due to concern “that important questions of jurisprudential significance for Michigan property and constitutional law are being left unresolved.”