Active: Litigation is ongoing in Wayne County Circuit Court.

Erica Perez spent her whole life watching her father, Romualdo, work hard to provide a good living for her mom and two siblings. Today, Erica is doing the same. To build a legacy for their family, she and Romualdo bought a four-unit apartment home in Detroit in 2013, intending to rent it out, then move the family to Michigan once Romualdo retired.

For three years after they bought the home, Romualdo used his days off to make the 11-hour drive from New Jersey to Detroit to work on the house. The house, an older one on the city’s southwest side, cost the family $60,000. Every bit of money they saved after the purchase went toward repairs.

“We’ve always believed that if you work hard for something in this country, you can achieve it,” Erica says. “That’s why this house was so important to us. We were literally trying to live the American Dream.”

By 2017, the dream appeared to be in reach—the four-unit home was in good shape and already tenant-occupied. Then, the family began to repair the single-family home—the home where the Perez family planned to someday live. However, later that year, the dream turned into a nightmare. Wayne County seized the family’s home because they unknowingly underpaid their 2014 property tax bill by $144. This, despite the fact they had paid their property taxes in full every year since.

The county tacked on another $359 in interest, penalties, and fees, foreclosed on their property, sold it for $108,000, and kept every cent beyond what was owed—which state law not only allows, but actually encourages.

Erica and her dad never thought that this could happen in the United States. The Perez family’s home equity—the surplus kept by the county—is just as much their private property as the home itself and is just as protected by the Takings Clause of the Constitution. On July 9, 2019, they filed a federal lawsuit challenging Michigan’s General Property Tax Act.

This case is the latest in PLF’s ongoing campaign to eliminate home equity theft in Michigan and other states that continue to allow this unlawful practice.

On July 17, 2020, the Michigan Supreme Court ruled that counties cannot steal the savings have people stored away in their homes. PLF represented Uri Rafeli in his constitutional challenge against Oakland County, Michigan and its treasurer, who pocketed nearly $25,000 over an $8.41 tax debt owed on Rafaeli’s rental property.

What’s At Stake?

  • The government cannot take private property—even in the form of home equity—without paying for it.
  • The government can impose taxes, reasonable interest and costs on unpaid tax debts. However, it is unconstitutional for the government to keep more than it is owed when it forecloses on a home.

Case Timeline

August 06, 2020
July 09, 2019