Everyone knows that homeownership comes with certain annoying, practical concerns. Let’s crib from Donald Rumsfeld and call these the “known unknowns.”
For example: We all know our property taxes will go up—we just don’t know when or how much. We know we’ll someday be hit with costly repairs—maybe to fix plumbing, roofing, or flood damage—even if the exact circumstances elude us.
But in home ownership, there are also “unknown unknowns”—things that aren’t remotely on your radar, things that would never occur to you to worry about.
And as Rumsfeld said, it’s the unknown unknowns that can give you the most trouble.
Here are five hidden legal pitfalls of homeownership that you probably didn’t know were possible:
1. If you fall behind on property taxes, you could lose your home and all your equity.
In 12 states, the government can foreclose on your house over a tax debt as small as $8, sell the house at auction, and keep all the proceeds. You’d lose your home and every penny you’d invested in it.
Home equity theft, or “tax and take,” is an insidious practice that strikes families who are already down on their luck. Pacific Legal Foundation has worked with home equity theft victims who fell behind on property taxes after losing a job or falling ill. The consequences can be devastating.
One client described sitting at his kitchen table when he heard a knock at the door: A stranger had arrived to change the locks. Another client had to live in her car after being evicted. She was left with nothing—even though her home was worth $220,000 and her tax debt was only $25,000.
Nobody thinks the state will steal their home. One woman, a middle-aged nursing assistant, told us that if she knew home equity theft was a remote possibility, she could have figured out a way to come up with the money for her tax debt.
“I would’ve never thought that it could have happened to me,” she said.
2. If previous owners of your property violated their easement agreement, you could face millions of dollars in fines.
Warren and Henny Lent learned this the hard way. When they bought their dream home on the California coast in 2002, the house was already 20 years old.
But suddenly, five years after the Lents purchased the house, the California Coastal Commission informed them that the home’s gate and outdoor stairway violated the original owners’ agreement to provide the commission with an easement alongside the house.
Never mind that the gate and stairway were already built when the Lents bought the house. Never mind that the easement had never been developed into a public access path.
The Lents gave the commission keys to the gate. They even offered to remove the gate once the easement was ready to be developed.
Not good enough.
The commission slapped the couple with a stunning $4.185 million fine—more than their entire equity in the home.
They tried to fight the fine but lost. They’re now on the hook for the full $4.185 million.
3. The city can fine you if it doesn’t like your paint job.
Mount Dora, Florida, doesn’t have any ordinances on the books dictating what color people paint their homes. But that didn’t stop Mount Dora officials from citing Nancy Nemhauser and Lubek Jastrzebski for painting a mural on their exterior walls in the style of Vincent van Gogh’s “Starry Night.”
The couple chose the unique paint job as a tribute to their autistic son. But the city objected, first arguing that the mural constituted illegal graffiti—even though the couple commissioned the mural on their own house—and then, when that argument failed, arguing that the mural constituted an “unpermitted sign.”
Even though it defies common sense to call a wraparound, wordless mural a sign, the magistrate went along with the city’s “unpermitted sign” claim. The couple found themselves fined $100 per day over their Starry Night house mural.
But they refused to paint over the art they’d commissioned for their son. As the daily fines mounted—eventually topping $10,000—public support for the couple grew. The city ultimately dropped the fines after PLF stepped in to represent the couple at no cost.
4. If you want to rent out part of your home on Airbnb, you might have to sign away your Fourth Amendment rights.
If you’re thinking about earning extra cash by renting out part or all of your home on a platform like Airbnb, check your local ordinances first: Some cities and towns require homeowners to complete a registration process before renting to short-term visitors.
What does the registration process entail? In at least one city, it means waiving your Fourth Amendment protection against unreasonable searches and seizures.
Norfolk, Virginia, requires homeowners to sign a right-of-entry statement before listing property on sites like Airbnb. The right-of-entry statement “allow[s] any law enforcement officer to enter the property to inspect it for compliance.” In other words, once you register as a short-term rental landlord, police can enter your property without a warrant.
5. The federal government might designate your property as “navigable waters.”
You probably don’t own a waterway. But if you own a “soggy residential lot,” like the Sacketts in Idaho, you might find yourself slapped with thousands of dollars in fines.
The Clean Water Act gives the EPA far-reaching authority over navigable waters, or “waters of the United States.” But what exactly counts as navigable waters? The EPA says the definition includes land like the Sacketts’—a lot in a subdivision that doesn’t have permanent standing water.
The Sacketts had to halt construction of their home after the EPA threatened them with up to $75,000 a day in fines. The couple has been fighting the EPA for 15 years now—and PLF will be arguing their case at the Supreme Court next term.
If we’re successful, the government will have to narrow the definition of navigable waters—and we’ll be able to knock one hidden legal pitfall off this list.