Have you ever miscalculated a bill? Typically, a late fee or a strongly worded warning follows. But do you know what happens if you miscalculate and underpay your property taxes
— even by just a few dollars?
In at least 13 states, the government will seize your property, sell it, and leave you with nothing.
Property taxes must be paid, and it’s legal for governments to take property to pay an outstanding debt. But the government shouldn’t keep any more money beyond what’s owed. The rest is your property: home equity that you’ve worked hard to build.
In courts and legislatures, Pacific Legal Foundation fights to protect your nest egg and prevent governments from stealing homeowners’ equity.
Consider the case of Uri Rafaeli, who owned a home in Oakland County, Michigan. He mistakenly underpaid his property taxes by $8.41. To cover the debt, the county sold the property at auction for $24,500 and kept every penny of the proceeds. Mr. Rafaeli is fighting the theft of his home equity at the Michigan Supreme Court, which heard oral arguments in the fall of 2019.
If you live in one of these states and face foreclosure and loss of equity over mistakenly unpaid property taxes, we’re interested in reviewing your case for possible pro bono legal representation.
An 83-year-old retired engineer in Michigan underpaid his property taxes by $8.41. In response, Oakland County seized his property, auctioned it off to settle the debt, and pocketed nearly $24,500 in excess revenue from the sale.
Uri Rafaeli is an 83-year-old engineer and great-grandfather. He never expected the government to treat him like a drug dealer or gang banger. But last year the Michigan Court of Appeals held that a county government could use civil asset forfeiture—the same legal process used by police to confiscate drug lords’ mansions—to seize a modest rental property Mr. Rafaeli owned because he accidentally underpaid his property taxes by $8.41.
Jim Boerner, a disabled veteran in Mesa, Ariz., recently landed in the headlines after losing his home over $236 in unpaid property taxes. Boerner had tried to pay off his property tax debt to the county but was given wrong information and therefore failed to save his home from the auction block. An investor bought the property for $4,400 and offered to sell it to him for more than $26,000 or face eviction.
The Prince of Motown himself, Marvin Gaye, sang that “Life’s a Game of Give and Take.” But for county treasuries across the state of Michigan, it’s more like a game of take, and take, and take some more.
Uri Rafaeli’s story is heartbreaking to read: Uri is a retired 83-year-old Michigan engineer, and in 2014 he accidentally underpaid, by $8.41, the property taxes on a home he rented out. But instead of notifying him of the issue and helping him, his county government seized the home and sold it at auction for $24,500. The county then kept all the proceeds—leaving Rafaeli with nothing.
During the last recession, Gary Guidotti, a 78-year old electrician in Cascade County, Montana, fell behind on his property taxes. Under Montana’s tax law, the county took his home because of the $1,125 tax debt and sold it to investors for pennies on the dollar. Guidotti lost everything while investors reaped a windfall—taking absolute title to Guidotti’s $140,000 home.
A few years ago, my husband and I rented a car while visiting Italy. We had great fun driving to small towns off the beaten path. But about six months after we returned, I received a $250 ticket in the mail for accidentally driving onto a “locals only” road. If we had received the ticket promptly, we would’ve had to pay only about $50. But because it was a rental, it took months for the government to notify us—the actual drivers—so the fine grew to $250 by the time it showed up in the mail. Their fine schedule actually rewards the Italian government for terrible inefficiency in notifying drivers of their violations.
Many American communities are suffering from a housing shortage. Affordable housing is disappearing, new homes aren’t being built quickly enough, and the racial disparities in housing availability are widening.
PLF client Uri Rafaeli accidentally underpaid the property taxes on his Southfield Michigan house by $8.41. So Oakland County took Rafaeli’s house to collect on the small debt. The County also took PLF client Andre Ohanessian’s 2.7 acres of valuable land in Orchard Village to collect a $6,000 debt. The County sold both properties and kept all the profits. This was a devastating blow to both former owners whose equity was taken by the County as a massive windfall.
Help us end the practice of home equity theft for good. Your support helps us bring additional legal challenges and legislative solutions to protect the home equity of hardworking Americans.
HELP END HOME EQUITY THEFT
