The borrower allegedly lied on a sworn form – and may still get the money
A Michigan mortgage holder just lost its claim to surplus proceeds from a tax-foreclosure sale – because it missed two filing deadlines.
The Michigan Court of Appeals, in an opinion issued on March 18, 2026, ruled that Banyon Investments, LLC had no right to intervene in a tax-foreclosure surplus-proceeds case after it failed to follow the state's statutory claims process. The decision is a sharp reminder that in Michigan, no matter how legitimate your mortgage interest is, the clock does not wait for you.
Here is how it played out. In 2015, Annamarie Butterworth bought a residential property in Warren, Michigan for $65,450, partially financed through a $49,600 loan from Insiders Cash, LLC. Insiders Cash recorded a mortgage, then assigned it to Banyon Investments in July 2018. Banyon recorded the assignment. Everything was in order.
Then Butterworth stopped paying her property taxes. The Macomb County Treasurer launched foreclosure proceedings in June 2021, and a foreclosure judgment was entered against the property on February 4, 2022. Under Michigan law, that judgment set the wheels in motion – because Butterworth did not pay the delinquent taxes by the March 31, 2022 deadline, all liens and interests in the property, including Banyon's mortgage, were extinguished.
There was still a path for Banyon to recover something. Michigan's General Property Tax Act requires anyone with a prior interest in a foreclosed property to file a notice of intent – a Form 5743 – with the county treasurer by the July 1 immediately following the effective date of the foreclosure. After the property sells, claimants then have between February 1 and May 15 of the following year to file a motion in circuit court to actually claim their share of any surplus.
Butterworth filed her form on time. Banyon did not. Butterworth filed her motion to claim the surplus on time. Banyon did not do that either. Instead, Banyon showed up two months after the claims deadline with a motion to intervene, arguing it should be allowed into the case through equitable subrogation – essentially, a legal theory that would let it step into Butterworth's shoes and collect proceeds based on a clause in the original mortgage.
The appeals court was not persuaded. It held that Michigan's surplus-proceeds statute is the only game in town. There is no side door, no workaround, and no equitable remedy that substitutes for following the process. Banyon's mortgage interest was gone. Its right to claim surplus proceeds depended entirely on complying with the statute, and it did not.
There is another wrinkle worth knowing. The court noted that Butterworth falsely stated on her sworn form that no other interests existed in the property at the time of foreclosure. That was not true – Banyon's mortgage was on the record. The court called the outcome "incongruent," acknowledging that Butterworth may have effectively blocked Banyon from receiving timely notice. But even so, the statute is the statute, and the court encouraged the Michigan Legislature to consider amending the law to address situations like this one.
For mortgage professionals, the practical takeaway is straightforward. If you hold a mortgage interest – or an assigned mortgage interest – on a property that gets swept into tax foreclosure in Michigan, you need to be tracking those deadlines yourself. File the Form 5743. File the motion to claim proceeds. Do not assume the county will notify you in time, and do not rely on the borrower to disclose your interest honestly.
The court did leave one door open for Banyon. While the mortgage lien is gone, the underlying debt is not. Banyon can still potentially sue Butterworth on the promissory note in a separate action. But that is a different fight, in a different courtroom, with no guarantee of recovery.
