BEAR LAKE — A Northern Michigan family’s lawsuit against Manistee County could be heading to the United States Supreme Court — and if the court rules in their favor, it could make millions of dollars available for Michigan property owners.
The Koetter family of Bear Lake is arguing that they were shorted tens of thousands of dollars after their home was repossessed in 2021 over a $4,000 debt.
Just months after foreclosing on the property of homeowner Chelsea Koetter, Manistee County sold the home at auction for more than a hundred thousand dollars.
That purchase was made by Chelsea’s father Bob, which kept the home in the family — but the Koetters did not see any of those earnings and was now out the difference.
“What this would do is just to return the family’s money to the family that was robbed through this statute,” said Christina Martin, a lawyer with the Pacific Legal Foundation representing the Koetters in court. “The county didn’t just take what was owed. It kept all the money, which was more than $100,000 of Chelsea’s family’s money.”
Manistee County Treasurer Rachel Nelson said Thursday that the county does not comment on pending litigation.
State reports show that Koetter’s case is one of hundreds in which a property is repossessed and quickly resold by a municipality.
The Michigan Supreme Court sided with Manistee County when the case reached them previously — the US Supreme Court would be the next step in the process.
If the Supreme Court decides to take up the challenge, hundreds of other forfeitures could be undone, potentially making millions of dollars available to Michigan property owners.
Under the state’s current structure, homeowners have three months to fill out a specific form indicating that they intend to claim any excess earnings brought in by a property’s sale. That deadline is on July 1.
Public records from Oakland County, Michigan’s second most populous, show that very few homeowners ever get access to those profits.
“We found that more than 95% of the owners were unable to get their surplus proceeds, and it seems to be that the vast majority are simply missing that July 1 deadline,” Martin said.
Martin has also successfully argued a similar case before the current US Supreme Court.
In 2023, Martin represented a Minneapolis woman who owed $15,000 in taxes. A county foreclosed on the woman’s property, sold it for $40,000 and kept the extra revenue for itself.
The justices ruled in favor of Martin’s client 9-0 and invalidated some of Minnesota’s property forfeiture laws.
Minnesota lawmakers also established a $109 million fund to settle disputes similar to those of the Koetters.
If Michigan’s forfeiture policies are eventually overturned, a similar program could be established in Michigan.
The justices could decide Friday whether or not to hear the case. They could also delay their decision by a few days and return to the question after the weekend.