Posted on 02/13/2024 1:48:35 PM PST by nickcarraway
The Supreme Court supposedly put an end to “home equity theft” last year. But some state and local governments have found a loophole.
In Arizona, citizens can still lose their houses over minuscule tax bills, despite a unanimous 2023 Supreme Court ruling that was supposed to paralyze the practice nationwide.
A disturbing chasm is growing between the letter of the law and the spirit of justice. Christine Searle, a 70-year-old retiree, faces the loss of her home—valued at hundreds of thousands of dollars—over a mere $1,607.68 in back taxes. Sadly, her story is not uncommon in Arizona.
For nearly two decades, Searle's home in Gilbert, Arizona, has been more than walls and a roof—it has been a haven of happy memories. But because she owed taxes to Maricopa County, a tax lien was placed on her home a few years ago. Arizona law then allowed the company that purchased the lien to foreclose on her home, meaning Searle lost her home and all its equity. The notion that a home can be auctioned off and ultimately acquired for a fraction of its value over a minor tax dispute is terrifying.
The government appraised her home at $376,800.
Arizona is not the only state that has permitted local governments to transfer tax liens, along with the accompanying power to foreclose on the property, to private entities. In Nebraska, for example, private investors have been known to buy out tax debt without formal correspondence with the homeowner. Once notified, those unable to satisfy their debt in full—plus interest and fees—have watched as the county treasurer gave the deed to their property away to the investor, effectively evicting them and robbing them of any equity in surplus of their debt.
The situation brings us face to face with the victims of complicated law. Searle's plight is a stark example of everyday people who are often ill-equipped to navigate the complexities of tax law and real estate regulations. And the consequences for an ill-informed action can be life altering. The issue here is not some clerical error—it is the framework of state law.
Thankfully, in 2023, the Supreme Court issued a unanimous ruling in Tyler v. Hennepin County, vindicating a woman similarly-situated to Searle and sending a message to governments that the status quo was no longer tolerable under the Constitution. In 2010, Geraldine Tyler, who was then in her early 80s, moved out of her Minneapolis condo after some disconcerting neighborhood incidents left her wanting more security. But she was not able to afford both her rent at a retirement home and her property taxes on the condo, accruing a $2,300 tax debt with an additional $13,000 tacked on in penalties, interest, and fees.
Tyler did not dispute that she owed the government that money. What she did dispute was that public officials could seize her condo, sell it for $40,000, and keep the $25,000 in excess of what she owed them.
The Supreme Court agreed with her. Despite the fractious divisions among the justices these days, they reached a consensus in Tyler that the government cannot sell a person's home to satisfy a tax debt and then pocket the surplus from the sale. This seemingly common-sense holding underscores a fundamental principle in our country—the law must serve justice, not facilitate a financial windfall.
"A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed," wrote Chief Justice John Roberts. "The taxpayer must render unto Caesar what is Caesar's, but no more."
In Arizona, Tyler hasn't yet reverberated. But the only real "distinction" between the scheme that was invalidated in Tyler and Arizona law is who reaps the windfall: In Tyler, it was the government. In Arizona, it's the purchaser of the tax lien. But that's hardly a meaningful legal difference. One would think that the attorney general, or the Maricopa County treasurer, would step in and announce that state law can no longer stand up to scrutiny. Indeed, Colorado's Attorney General made such an announcement last year regarding Colorado law after Tyler was issued.
And while the Arizona legislature, to its credit, is considering amending the law, that won't do much to help Searle, who is already suffering. So, my firm, Mountain States Legal Foundation, has stepped up to represent Searle. We're suing in federal court because we believe that the law should be the first line of defense for homeowners, not a weapon that takes away their property. As Roberts wrote in Tyler, the taxpayer must render under Caesar only what is truly owed to Caesar—not more.
The value of a home extends beyond its market price—it is immeasurable in the comfort, security, and belonging it provides. For Searle, and for countless others in her position, the true cost of Arizona's law is incalculable. Her fight should be a catalyst for change. While the legislature figures out how to fix this problem, Searle's fight will continue in the courtroom, where she seeks the justice that every homeowner deserves.
Yes, but we are taxed in so many ways. I would like to see just one form of tax, and all others abolished.
And yes, I hate paying the federal taxes the most because so much of it is spent on things I don't want funded.
"Pay the thousand bucks, or I'll push you off the cliff."
"All right. Sounds good. Go ahead."
Seriously? Is this the basis of which you want to argue on? Sheesh.
I pay a lot of theft, I don't know about you.
So now you equate payment of taxes as theft. Got it.
This selling someone’s house for less than 1% of the value is just evil.
__________________________________________
As we have already established, no one has taken anything, it’s just the motions to take. And I’m not sure that’s evil. It’s a great motivator to do the right thing.
And as we’ve also established, the woman could have avoided this possible theft in the first place. Just like I don’t drive on MLK Blvd, much less park there.
Well said.
I’m sure we will certainly be priced out of our 30plus yr home since we don’t have big fat govt pensions....perhaps we will have to divorce and only partner’s income will be counted to look “poor” enough...
Should never happen
Need more information re why she didn’t pay her taxes. What is her financial status re income, deductions, health conditions, etc.?
Perhaps the State could set up a fund from fines frpom civil & criminal cases to cover “needy persons taxes, etc.”.
I know that some cities/states have such a “rainy day fund”.
What does ARIZONA HAVE, IF AT ALL?
If this woman is not mentally handicapped or drugged up or similar, this is her fault. Thousands of properties a year get sold to people who paid the back taxes on them, it’s a very common no-risk investment. Most small investors make it because the govt pays a good interest rate, at least they did when I worked on tax valuation protesting. The vast majority of properties acquired this way are usually so worthless people just stop paying the taxes and wait or them to go away. I know a guy who jumped on 400 feet of frontage on the Blue River in Colorado for a few hundred bucks in back taxes. He got it. Went to see it, only way to access was from the river and the piece was about 4 feet wide and in the flood plain. It probably originated as a “vacancy”, an opportunity to hunt for cheap oil/gas rights, etc. Old ‘Land men’ will know what I’m talking about. All the good ones have been found by know I would think.
I was looking at a house (that I subsequently bought) and there was an abandoned property next door. The house was of no value and the property was a junk yard. I did some research and found out it was in tax foreclosure. I bought the acre of land for $762. I cleaned up the lot and last year, after finally getting the tax deed, had the house torn down and removed. I did a title search and there are no liens on the property. I found out later that the daughter of the woman who last owned the property (and died) let this property go over a $250 A YEAR property tax bill. That’s crazy.
This never should have been allowed to happen in the first place.
How then does the government entity then collect the taxes used to run the entity. Here is how it works in Alabama. If taxes are delinquint on the first of the year about 5 months later if still not paid the property goes to auction. for the price of the taxes due. The one that bids for the lowest interest on the taxes anywhere from 0% to 10% paid wins. The bidder then must maintain paying the taxes for 5 years after that time. If the taxes have not been redeamed plus the interest rate within that time, he then has the right to the property. I think that is fair to everyone.In other words, if you can’t afford the taxes, you have five years to sell the property and keep your equity.
What should the funding source be for police, fire fighting, local schools, garbage collection, maintenance of streets and roads, libraries etc.?
Forgive tax debt, for the same reason they want to forgive college debt
It is an odd conservative who doesn't.
Have you never heard the phrase, "Taxation is theft"?
It's so popular it's actually a meme.
Do a search on "Taxes is theft meme". You will be astonished at how long this meme has been going on, and how much variety there is in it.
I don't know if she can pay or not. If she can pay, she should probably do that to avoid all the hassle, but maybe she's at that age where she wants to make a stand on principle, because people have to live with themselves.
Well thank you. I generally speak from the heart.
I do not dispute that there must be taxes to support necessary functions of government, but we are taxed *WAY* beyond necessary functions of government.
God only asks 10%. Government should not ask for more than that.
And it shouldn't be a tax on property. It should only be taxes on income.
If a person chooses to grow their own food and live like a hermit without need for cash, then they should be allowed to do so without being evicted from their land.
Most will choose to be part of the community both socially and economically, but the land should remain the property of the owner until it is sold or passed to someone else.
wanna free house????
this guy figured it out.
Must Watch
sounds on pic.twitter.com/CFMDU96Ht1— 🅰🅼🅴🆁🅸🅲🅰 🆁🅴🅰🅻 (@AmericaReal3) February 13, 2024
>> And it shouldn’t be a tax on property. It should only be taxes on income. <<
I too am against property taxes, which thus require a person to be involved in acquisition of money.
However, I think that income taxes are wrong too. They are taxing people for doing something good, and those who do not work, or work under the table, are not “penalized.”
This is why I am for the Fair Tax, which is a federal sales tax that gives each person a “prebate” (advance refund) for the amount of taxes on what are considered necessities, and charges a 30% sales tax: note that they have figured out that initial prices will go down by eliminating the need for tax accountants and lawyers as a part of the sellers’ costs.
https://fairtax.org/about/how-fairtax-works
I have objections to tolerating this state of affairs as well.
I believe in the Bible view that if you don't work, you shall not eat.
It is nonsense that this nation creates and funds so many parasites.
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