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.

Home equity theft

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. On July 17, 2020, the Michigan Supreme Court ruled that counties cannot steal the savings people stored away in their homes.

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 ruled in 2020 that counties cannot steal the savings people stored away in their homes, ordering counties to return surplus funds to property owners once debts are settled.
  • 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.

Twelve States Allow Home Equity Theft

Map

Cases

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.

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.

February 19, 2020

How local governments are stealing Arizonans' home equity

This article was co-authored by Daniel Dew, legal policy director for Pacific Legal Foundation. Jim Manley lives with his family in Phoenix, where he litigates in defense of individual liberty for PLF. Can the government seize your home over an $8 property tax miscalculation and leave you with nothing? In Arizona, and a shrinking number ...

September 19, 2019

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

Editor’s note: In July 2020, the Michigan Supreme Court ruled in favor of Uri Rafaeli, preventing the government from foreclosing on private property for unpaid property taxes, and keeping all the proceeds. This is a major victory for property owners in Michigan and is an important step in ending Home Equity Theft nationwide. *** Uri ...

August 09, 2019

Michigan's affordable housing crisis and property rights

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. In Michigan alone, the numbers are stark: a recent report on housing needs by the Michigan State Housing Development Authority (MSHDA) sugg ...

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 ...

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 ...

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 ...

Support PLF

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