Michigan Real Estate Transfer Tax

The United States Supreme Court has decided not to review a Michigan Supreme Court case that held that a taxpayer was liable for the State Real Estate Transfer Tax based on the value of the lots as improved by the homes.  The tax is imposed on recorded instruments and the only recorded instrument in the transaction was the deed.  The “value” exchanged for that deed included both the cost of the lot and the home, and so the Tax Tribunal correctly held that that value was the proper measure for taxation.  However, the Tribunal's order imposing penalties on the taxpayer was reversed.  The Department of Treasury did not prove that the taxpayer acted negligently or with any intent to defraud when it paid taxes on the value of the unimproved land and the imposition of penalties is not warranted in the absence of such evidence. (Lake Forest Partners 2, Inc. v. Michigan Department of Treasury, Michigan Supreme Court (2008) 480 Mich 1046 , 743 NW2d 881 , cert denied, U.S. S. Ct. Dkt. No. 08-109, 10/06/2008.)

Foreclosure of Real Property

The U.S. Supreme Court has decided not to review a Michigan Supreme Court decision that held that the Wayne County Treasurer could not foreclose on a parcel of real property because the property was publicly owned.  The foreclosure of publicly owned property is prohibited under Michigan law.  [MCL 211.78g(1)]  The Michigan Court found that the Wayne County Treasurer had reason to know that the property was publicly owned because there is no dispute that the plaintiff Detroit Building Authority, which was incorporated by the intervening plaintiff City of Detroit, was the owner of record and had filed both a deed and an affidavit of property transfer notifying the county that the property was tax exempt.  (Michigan Financial Investments, LLC v. Detroit Building Authority, et al., Michigan Supreme Court (2007) 480 Mich 897 , 738 NW2d 767 , cert filed, U.S. S. Ct., Dkt. No. 07-1605, 10/06/2008.)