Nebraska Supreme Court rules homeowner must receive just compensation after falling prey to home equity theft

Two Pacific Legal Foundation clients have reason to celebrate this week as the Nebraska  Supreme Court ruled that Kevin Fair and Sandra Nieveen must be compensated for the equity the government took from them via home equity theft. This victory comes more than a year after Pacific Legal Foundation secured a unanimous victory at the U.S. Supreme Court confirming, as PLF has long argued, that home equity theft is unconstitutional.

For decades, certain states—including Nebraska—gave government the authority to take an individual’s home and all its equity to satisfy unpaid property taxes. In most cases, the home’s equity far exceeded the amount of the debt.

As for the victims of home equity theft, many lost everything.

Kevin Fair has endured a string of tragic events over the past several years. He and his wife lived paycheck to paycheck, always struggling to make ends meet. Things went from bad to worse when his wife was diagnosed with multiple sclerosis. Her medical needs required round-the-clock care, but the Fairs couldn’t afford to hire someone. Kevin made the difficult choice to quit his job and become his wife’s primary caretaker. This meant relying solely on his Social Security checks to get by.

His wife’s condition worsened as the bills piled up. Eventually, she lost her battle and passed away. In the midst of the grief and financial hardships, Kevin fell behind on his property taxes, unable to pay his $588 bill.

He knew he was past due—but what he didn’t know is that the government had already taken steps to seize his home. He never received any letter or notification in the mail. Instead, as state law required, the County published notice of his peril in a small, local newspaper. Unaware that he should be looking for this notice, he never knew it was there until it was too late.

The County sold a tax lien for the unpaid taxes to Continental Resources, a private investor, which then had the power to tack 14% interest onto his debt. But Continental still said nothing to Kevin and instead quietly paid Kevin’s subsequent taxes so that he no longer received any tax bills from the County. Then, when the debt reached an impossible sum—$5,268—the investor gave him 90 days to pay. When Kevin couldn’t pay the debt on time, the County gave the investor Kevin’s home—and all of the equity he had in it, which was worth around $60,000.

Like Kevin, another Nebraska homeowner, Sandra Nieveen, found herself in a similar situation.

Legal Aid of Nebraska came to Kevin and Sandra’s rescue and helped them fight back in court—a valiant effort that was ultimately rejected at the Nebraska Supreme Court. Shortly after, with the help of Pacific Legal Foundation, Sandra and Kevin asked the U.S. Supreme Court to end home equity theft in Nebraska.

The Supreme Court put the cases on hold until it decided PLF’s case Tyler v. Hennepin County on May 25, 2023. In Tyler, the Supreme Court held that the government violates the Constitution when it takes more than it is owed. The Supreme Court then sent the two Nebraska cases back to the Nebraska Supreme Court to reconsider in light of Tyler.

Fortunately, on August 23, the Nebraska Supreme Court ruled in Kevin and Sandra’s favor, ordering Continental Resources to pay just compensation.

As a result, Kevin and Sandra will be paid for the excess equity that was unconstitutionally taken from them. This is a huge win, not only for Kevin and Sandra but also for countless other Nebraskans.

“We are thrilled that after years of litigation, Nebraska finally recognizes Kevin Fair’s and Sandra Nieveen’s’ right to their hard-earned equity,” said Christina Martin, senior attorney at Pacific Legal Foundation.

The Nebraska Supreme Court’s decision also sends a signal to other states that have not yet complied with the U.S. Supreme Court ruling in Tyler that property owners’ rights must be protected.

Nebraska is the latest state to make the right decision on home equity theft, but there is more work to do, and Pacific Legal Foundation is committed to ending home equity theft once and for all, through both legal action in the courts and legislative action.