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.

Featured Case

RAFAELI, LLC V. OAKLAND COUNTY

Michigan County Steals House for $8 Debt

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.

Local governments have perverse incentives to steal your property. We’ve found two:

  • Local governments can pad their budgets with stolen equity. In Detroit, for instance, there’s a budget line every year for the expected windfalls from home foreclosures.
  • Some politicians use the system to reward their friends and family with homes priced below market. In Montana, before the practice was banned, local treasurers sold foreclosed homes for pennies on the dollar to preferred private investors. In Michigan, some local officials auction properties to their family and connected businesses at a discount.

PLF is fighting home equity theft in the courts and legislatures.

  • The Michigan Supreme Court heard arguments in 2019 in Rafaeli v. Oakland County and will soon decide whether the practice is unconstitutional under the U.S. Takings Clause and Michigan Constitution.
  • The Montana legislature recently passed a bill (SB 253) banning this practice, in consultation with PLF. Attorney Christina Martin spoke with legislators and consulted on drafting the bill, which passed with overwhelming bipartisan support. Now, Montana homes will be sold to the highest bidder, the debt paid, and the former owner will receive the extra profits.

Thirteen States Allow Home Equity Theft

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.

Attorneys

Christina Martin

ATTORNEY

David Deerson

ATTORNEY

Jeremy Talcott

ATTORNEY

Joshua Polk

ATTORNEY

Cases

December 08, 2018

Wall Street Journal: For $8.41 in Unpaid Taxes, the Government Took Uri Rafaeli’s House

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.

September 17, 2019

The Hill: Arizona’s property tax law abuse must end

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.

September 19, 2019

In 13 states, it’s legal for governments to steal your home equity

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.

May 08, 2019

New Montana Law will save homes by ending state’s predatory tax foreclosure system

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.

June 14, 2019

How local governments are using foreclosure laws to steal people’s homes

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.

May 10, 2019

National coalition joins PLF against government-sanctioned home theft

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.

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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.

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