What Is a Tax Deed Sale vs. a Tax Lien Sale in Michigan?

Understanding the Difference Between Tax Sales in Michigan

If you’ve fallen behind on your property taxes — or are researching how delinquent tax properties are handled — you may have come across two common terms: tax deed sale and tax lien sale.

While they sound similar, they represent two very different legal approaches used by states to recover unpaid property taxes.

In Michigan, understanding the distinction is especially important because the state uses a tax deed system, not a tax lien system.

This article will explain the difference, break down how Michigan handles delinquent property taxes, and help you understand what happens if property taxes aren’t paid.

What Is a Tax Lien Sale?

In states that use a tax lien sale system, local governments sell the debt — not the property — to investors. Here’s how it works:

When property taxes go unpaid, the local government places a lien on the property.
The lien is then auctioned off to investors in a tax lien sale.
The winning investor pays the taxes owed and receives a tax lien certificate.
The homeowner must then repay the investor (with interest) to redeem the property.
If they don’t repay within a set period (often 1–3 years), the investor may foreclose and take ownership.

This system is used in states like Florida, Illinois, and Arizona — but not in Michigan.

What Is a Tax Deed Sale?

In a tax deed sale, the government doesn’t sell a lien — it sells the actual property after the owner fails to pay property taxes for a specific period. This is the system used in Michigan.

Here’s how Michigan’s process works:

If property taxes go unpaid, the local treasurer turns the delinquency over to the county after one year.
After two years, the county treasurer is legally allowed to foreclose on the property through an administrative process.
Once foreclosed, the property is sold at a public auction — known as a tax deed sale — and the county takes ownership before the sale.
The original owner permanently loses all rights to the property once it is foreclosed.

This process is governed by the Michigan General Property Tax Act, and the foreclosure is final, with no redemption period once the sale occurs.

Why the Difference Matters in Michigan

Because Michigan uses a tax deed system, homeowners who fall behind on taxes face a direct and accelerated risk of losing their property entirely — not just paying interest to a lienholder.

Unlike tax lien states, where there is often a long redemption window and no immediate threat of losing the home, Michigan’s system creates an automatic two-year clock from the date taxes are due to the point of foreclosure.

This means:

There is no investor buying a lien and waiting to collect from you.
The county becomes the owner once the foreclosure is final.
The home is sold at auction to the highest bidder, and the proceeds do not go back to the original owner.

To understand the full foreclosure process and your timeline, visit our detailed guide on selling property with delinquent taxes in Michigan.

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Are There Any Exceptions or Redemption Rights in Michigan?

Michigan offers a limited redemption period during the two years between tax delinquency and foreclosure. However, once the foreclosure date passes, there is no way to reclaim the property.

Important things to know:

You can pay off the taxes and redeem the property any time before the foreclosure auction.
Once the foreclosure is recorded by the court, you lose all legal ownership.
Michigan courts have upheld this process as final, even when the sale amount far exceeds the tax debt.

Why Michigan Uses the Tax Deed Approach

The state believes a tax deed system ensures:

Faster resolution of tax delinquency.
Quicker return of vacant or distressed homes to productive use.
A more predictable process for county governments to recoup unpaid taxes.

However, critics argue that it leaves struggling homeowners with fewer options and less time to recover their property compared to tax lien states.

When You’re Facing a Tax Deed Sale in Michigan

If you’re behind on property taxes in Michigan, it’s important to understand that you are not just at risk of owing money — you are at risk of losing the entire home. Because the state uses a tax deed sale system, acting early is the only way to protect your property.

To explore what options you may have — from selling to paying off the debt — read our guide on selling property with delinquent taxes in Michigan.

When You're Ready to Explore Options

If you’re approaching the foreclosure deadline and don’t know what to do next, we can help.

At Dennis Buys Houses, we work with Michigan homeowners to help them resolve tax issues quickly — including situations involving tax deed sales.

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📚 Frequently Asked Questions About Tax Deed Sales and Tax Lien Sales in Michigan

Does Michigan use tax lien sales or tax deed sales?
Michigan uses a tax deed sale system. When property taxes go unpaid for two years, the county forecloses on the home and sells it at public auction. Unlike tax lien states, there is no investor holding a lien certificate in Michigan.

What’s the difference between a tax deed and a tax lien?
A tax deed gives ownership of the property to the county, which then sells it. A tax lien, used in other states, only sells the right to collect the unpaid taxes — not the property itself.

Can I lose my home in Michigan due to unpaid property taxes?
Yes. If property taxes go unpaid for two years, the county can foreclose on the property and sell it through a tax deed sale. There is no redemption period after the sale is finalized.

Is there a redemption period in Michigan for tax-delinquent properties?
There is a redemption period before foreclosure, which lasts roughly two years from the date of delinquency. But afterthe foreclosure is completed and the deed is transferred, there is no way to reclaim the property.

Can I stop a tax deed sale in Michigan?
Yes, but only if you act before the foreclosure is finalized. You can pay the back taxes in full or explore selling the property to avoid foreclosure. For more details, visit our guide on selling property with delinquent taxes in Michigan.

What happens if my home sells for more than the taxes owed?
Under Michigan law, the county keeps the full sale proceeds — even if the home sells for far more than the tax debt. This has been challenged in courts but remains the law in most counties as of now.

Do all states use the same process for collecting unpaid property taxes?
No. States generally use either a tax lien system (selling debt to investors) or a tax deed system (selling the property itself). Michigan is firmly a tax deed state, which accelerates the foreclosure process.

Where can I learn more about what happens when I fall behind on property taxes?
Visit our educational guide: Selling Property With Delinquent Taxes in Michigan, which explains timelines, foreclosure laws, and options to avoid losing your home.

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We Help Michigan Families Navigate These Situations Every Day

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At Dennis Buys Houses, we’re not just cash buyers — we’re trusted problem-solvers who help Michigan families find real answers during difficult times.

Since 2004, we've been helping homeowners across Michigan sell their properties quickly and easily—without the stress of agents, repairs, or hidden fees.

We’re a family-owned, local business with deep roots in the community. Over the years, we’ve helped hundreds and hundreds of homeowners in situations just like yours—whether they’re dealing with delinquent property taxes, foreclosure, or simply needing a fresh start.

If you're dealing with a tough family situation and don’t know where to turn, we’re here to help.

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