Property Tax Repayment Agreements Unenforceable?

In Lancaster and York, LLC v Oakland County Treasurer, an unpublished opinion from the Michigan Court of Appeals, a delinquent real property owner entered into a repayment plan with the Oakland County Treasurer.  Notwithstanding the agreement, the treasurer foreclosed the property for unpaid taxes.  The property owner filed suit challenging the sale on the sole basis that there was an agreement for repayment of the taxes which the county breached.  The circuit court dismissed the case and the property owner appealed.

The Michigan Court of Appeals affirmed.  Contracts must be supported by consideration:  some promise, payment, or provision of goods or services by both parties to the contract.  Under the pre-existing duty rule, a party’s promise to provide performance that he is already otherwise required to provide—be it by statute, contract, or other enforceable duty—is not valid consideration to render an agreement an enforceable contract. Because the property owner had a pre-existing statutory duty to pay his property taxes, and because he promised nothing extra and paid nothing for the agreement, no contract was formed.

This opinion should make any delinquent taxpayer wary of entering into any sort of tax repayment plan with a municipality.  Any such agreement should require new consideration from the taxpayer, as well as an explicit agreement by the municipality that it will withhold the taxes from foreclosure.

© Steve Sowell 2017