State Rep. Phil Cavanagh (D-Redford Township) has introduced a bill that would require homebuyers who purchase property through a county auction — and not use as their personal homestead — to place three years’ worth of tax payments in escrow at the time of purchase.
House Bill 5034 is designed to specifically address a situation in Wayne County where nearly 80 percent of properties bought at foreclosure auctions in the last two years are again delinquent on their property taxes, according to a study by the Detroit Free Press.
The bill intends to help counties better manage foreclosed properties, Cavanagh said in a statement. “(It) will give county governments more tools to break this continuous cycle of delinquent taxes caused by speculators who are purchasing properties, doing nothing to reduce blight, and simply aren’t paying their tax bills,” he said. “This cycle undermines and erodes community stability, and makes it difficult for the investors out there who are playing by the rules and operating in good faith.”
Cavanagh said he hopes the bill “will act as a deterrent to the speculators out there who are taking advantage of a system that needs serious reform.”
In June, Cavanagh introduced House Bill 4882, the Distressed Communities Bill. Under the legislation, a county treasurer could declare a community distressed and then work with homeowners who have outstanding tax bills to develop payment plans. Upon successful completion of a payment plan, the treasurer would waive incurred fees.