The report found that $860 million was lost in government-seized homes

By Brett Rowland (The Center Square)

According to a new report, local governments or liens took over 8,950 homes with more than $860 million in equity from 2014 to 2021, allowing them to seize properties for unpaid property taxes.

The Pacific Legal Foundation, which is working to ban the practice, found that taking property to pay off property tax debts can be devastating for people with small tax debts.

“For tax credits of less than 1% of a property’s value, these laws have allowed officials to take homes that have been in families for generations and make people homeless,” according to the report.

The report highlights several cases, including a county in Michigan that took a man’s home for an $8.41 down payment. Oakland County later sold the property for $24,500. That case eventually went before the Michigan Supreme Court, which found the practice unconstitutional.

“The elderly, sick and poor, as well as the mentally ill and ethnic minorities are particularly at risk,” the report found.

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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.

The US Supreme Court is set to take up the Minnesota case, Tyler v. Hennepin County, which focuses on whether taking and selling a home to satisfy a debt to the government and keeping the excess value as a windfall violates the Fifth Amendment’s takings. stipulation, according to the SCOTUS blog.

“[Geraldine Tyler] failed to pay his property taxes,” said Christina Martin, senior attorney at the Pacific Legal Foundation. “Property taxes were about $2,300. After penalties and interest and fees were added, she owed $15,000. The county took her condo, sold it at auction for $40,000, and then kept all $40,000. In other words, Ms. The county received a $25,000 windfall on Tyler’s expenses.

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The foundation’s report shows that Tyler, 94, is not alone.

Angela Erickson, director of strategic research at the Pacific Legal Foundation, said that exceeded the 8,950 homes identified in the report, representing “a fraction of the extent of home equity theft in the nine states studied,” according to the report. The researchers collected data from only a portion of the jurisdiction and focused only on homes that were sold, he said.

“These laws are not just taking away family homes. They are stealing family nest eggs or generational wealth and so I take a moment to imagine that you have been saving for decades using your home as this vehicle for your savings. And in an instant you find you have no place to live and no safety net or wealth to pass on to your children,” Erickson said. “It’s devastating. It’s ruining these people’s lives.

Syndicated with permission from The Center Square.