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.
I’ll leave that to you. For myself, I’ll just pay my taxes on time, and then I won’t have to worry about it.
I think the property is still stolen.
The very first sentence of this article indicates the Supreme Court hamstrung the state in legal tax collections. So the state did an end run and transferred the debt to a private agency. Who did the dirty work.
Ethical? Not really. But neither is the homeowner ignoring a measly thousand dollar tax bill when other viable options were available to her.
I think it should be of interest to all citizens when our laws protecting private property are bent.
This is not only disproportionate punishment for the "offense" of not paying what other people assert that you owe them, but it violates a very fundamental constitutional protection for private property.
I think the property is still stolen.
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First of all, she has had nothing stolen. As even the headline says... She MAY....
If you leave your car unlocked on MLK Blvd with the keys in it and of course it is stolen, are you not even a little responsible?
As I said, private companies should not be tolerated in undertaking the duties of government. We have protections of our rights with government that we do not have if we allow private companies to violate those rights with impunity.
Ethical? Not really. But neither is the homeowner ignoring a measly thousand dollar tax bill when other viable options were available to her.
I don't consider a failure to pay a tax bill, and let me add, one which you may have had no input in deciding how much it will be, as an "ethical" question.
With all the abuse by government of the people, and their tendency to make people pay for obscene and immoral things, I dare say it is "ethical" to fight the payment of taxes in any way you can.
I think Jefferson said that "To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical."
In the process of being stolen then.
If you leave your car unlocked on MLK Blvd with the keys in it and of course it is stolen, are you not even a little responsible?
Foolish in light of the fact that the government tolerates and indulges thievery instead of curtailing it, but the thief is still responsible for the theft.
I believe we should live in a society in which people do not have to fear having their property stolen.
We should stop putting up with theft, but our bleeding heart courts won't let us do what needs to be done to stop it.
In the same way this homeowner was responsible for not paying her thousand bucks.
The selfie taker incident was an accident.
The homeowners incident was on purpose.
"We should stop putting up with theft". That extends to homeowners who don't pay their taxes.
Or set up a payment plan.
I myself have no fear of my property being at risk for not paying a thousand dollar tax bill. I have no fear of my car being stolen off of MLK Blvd.
Certainly there are many things beyond our contol that might make us a victim of theft. Even theft by the state. But this woman's failure to pay? That's on her.
It is of interest to me. That’s why I’ll avoid it if possible.
And if she doesn’t pay, it means someone else has to pay more to cover the shortfall.
Property taxes should be abolished.
I can believe it! There are people who constantly do searches of property files looking for people who have forgotten to pay their taxes. They then pay the tax and after so long claim the property is theirs. One of the men I worked with had that problem with someone claiming his property.
Our family has 40 acres no one has lived on for 40 years. I keep the taxes paid and notify all family members the tax has been paid.
Yet I keep getting letters from various land companies wanting to buy that property. I got two letters last week, and three letters on Monday. The property is 25 miles from the nearest town in the middle of the Ozarks. The whole family has agreed not to sell.
In the same way this homeowner was responsible for not paying her thousand bucks.
The difference with the homeowner is that someone is pushing her off the cliff.
"We should stop putting up with theft". That extends to homeowners who don't pay their taxes.
I don't consider money I make to be the property of the government. I don't regard refusing to give them *MY* money as "theft." I consider them taking it against my will as theft.
I pay a lot of theft, I don't know about you.
Can you get property tax insurance, kind of like mortgage insurance?
I don't know if it is or not, but what I do know is that it is absolutely evil to take a woman's home over such a small tax bill.
As i've said, the government should only be able to take someone's house once the tax bill equals the value of the house.
This selling someone's house for less than 1% of the value is just evil.
Yeah, I don't want to play with them either. They hit too hard, and for very little provocation.
I agree. I was absolutely astonished upon reaching adulthood to learn that people have to pay just to own a piece of property. My immediate thought was that you don't actually own it, you just rent it from the government.
We are taxed in so many sundry ways, and so much of what it is spent on I despise and oppose.
At least property taxes do go for things that are local, as opposed to Federal Taxes that go God knows where.
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