Treasurer warns of legal uncertainty and potential liability from foreclosure rulings; 113 Schaeffer claims noted

Karen, Jackson County Treasurer, briefed the General Government Committee on potential county exposure related to recent court rulings affecting tax-foreclosed-property proceeds.

Karen said the Rafaeli decision (she referred to the “Rafaeli decision” dated to July 2020 during the discussion) and more recent Schaeffer litigation have created “ripple effects” for counties that take or acquire tax-foreclosed properties. She warned that exercising a right of refusal or taking properties after tax foreclosure could create litigation risk if former owners file claims for remaining proceeds.

The treasurer told commissioners that the county has received 113 Schaeffer claims and that assessments of exposure are ongoing. She said her office and a contract title company maintain auction and sale records and will calculate potential remaining proceeds where available. On timing, she said the Schaeffer claim window remains open for many prior years and that claims back to 2011 are among those being reviewed.

Multiple commissioners asked whether punitive damages or insurance coverage applied to potential adverse judgments. The treasurer said she was not aware of punitive awards to date and that insurance coverage for such claims is a new area she has not yet confirmed. The committee discussed timeframes and statutory windows; Karen noted public act 123 of 1999 established the foreclosure framework used beginning in 2002 and described separate processes for Rafaeli-era and pre-Rafaeli claims.

Committee members asked the treasurer to return with a precise accounting of potentially liable properties and estimated maximum exposure so the board could evaluate options. The treasurer said contract vendors and state association counsel are providing updates and that her office will prepare more detailed numbers for a subsequent meeting.