(The Center Square)
Local governments or lien holders have taken more than 8,950 homes with more than $860 million in equity from 2014 to 2021 under laws that allow them to seize properties for unpaid property taxes, a new report says. .
The Pacific Legal Foundation, which works to ban the practice, has found that taking property to pay property tax debts can be ruinous for people with small tax debts.
“For tax debts less than 1% of a property’s value, these laws allowed officials to take homes that had been owned by families for generations and even leave people homeless,” according to the report.
The report highlights several cases, including a Michigan county that took over a man’s home for underpayment of $8.41. Oakland County then sold the property for $24,500. That case eventually went to the Michigan Supreme Court, which ruled the practice unconstitutional.
The report found that “the elderly, sick and poor, as well as the mentally ill and racial minorities, are particularly at risk”.
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Twelve states and Washington DC allow the practice. The states are Alabama, Arizona, Colorado, Illinois, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon and South Dakota, according to the foundation.
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The Supreme Court of the United States is about to take up a case from Minnesota, Tyler vs. Hennepin Countywhich focuses on whether taking and selling a home to satisfy a debt to the government, and keeping the betterment as a windfall, violates the receipts clause of the Fifth Amendment, according to the blog SCOTUS.
“[Geraldine Tyler] failed to pay his property taxes,” said Christina Martin, senior attorney at the Pacific Legal Foundation. “The property taxes owed were approximately $2,300. After adding penalties, interest and costs, she owed $15,000. The county took his apartment, auctioned it off for $40,000 and then kept the $40,000. In other words, the county got a windfall of $25,000 off Ms. Tyler.
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The foundation’s report shows Tyler, 94, is not alone.
Angela Erickson, director of strategic research at the Pacific Legal Foundation, said the problem goes beyond the 8,950 homes identified in the report, which represent “a fraction of the scale of home equity theft in the nine States Studied,” according to the report. The researchers collected information from only a fraction of the jurisdictions and focused only on homes that sold, she said.
“These laws don’t just take family homes. They steal family nest egg or generational wealth and so I want to take a moment to have us imagine that you have been saving for decades, using your home as that device for your savings. And then you discover that in an instant you have no place to live and no safety net or wealth to pass on to your children,” Erickson said. “It’s devastating. It ruins the lives of these people.
Syndicated with permission from The central square.