Woman Loses Home Over $3,000 Tax Debt, County Keeps $23,500 From Sale. She’s Still Fighting a Decade Later
A Michigan woman lost her home over approximately $3,000 in unpaid property taxes. Allegan County then sold the house and kept all $23,500 from the sale, leaving her fighting to recover the money years later.
More than a decade after losing her home, Denise Thompson’s fight to recover the money received new life on Oct. 5, when a federal appeals court overturned an earlier dismissal of her lawsuit.
The ruling allows her fight to continue, although it does not guarantee she will recover the money.
The County Kept Money Beyond What Was Owed
According to the U.S. Court of Appeals for the Sixth Circuit, Thompson lost her home in 2013 or 2014 under a former Michigan system that allowed counties to foreclose on properties over unpaid taxes and keep the sale proceeds, even when they exceeded the debt.
Thompson was among the homeowners covered by a federal class-action lawsuit filed in December 2014. The lawsuit alleged that counties had violated homeowners’ constitutional rights by keeping money from foreclosure sales beyond what was owed in taxes.
The case was dismissed in 2015 but reopened in 2019. Thompson and several other homeowners eventually opted out of a proposed settlement in July 2023, choosing instead to pursue their own federal lawsuit against Allegan County.
They filed that lawsuit in March 2024. However, a federal district court dismissed their federal claims, ruling that they had waited too long to sue.
Appeals Court Gives Homeowners Another Chance
The homeowners appealed, arguing that their participation in the earlier class-action lawsuit had paused the legal deadline for bringing their federal claims.
On Oct. 5, a three-judge panel of the Sixth Circuit ruled that the lower court had incorrectly applied federal law rather than Michigan law when deciding whether their claims were filed too late.
Under Michigan law, the judges found, the earlier lawsuit’s dismissal and reopening did not interrupt any pause in the filing deadline.
However, another question remained: whether the original class-action lawsuit paused the deadline for claims against Allegan County, which was not formally named as a defendant until 2023.
The appeals court sent the case back to the district court to reconsider that question and determine whether the homeowners’ federal claims can proceed.
For Thompson, the decision offers another chance to recover the money Allegan County kept beyond what she owed in taxes.
