It’s a great week for ending home equity theft in Nebraska

June 08, 2023 | By JOSHUA POLK
Christina and Tawanda

Only two weeks removed from Pacific Legal Foundation’s major Supreme Court victory against home equity theft in Tyler v. Hennepin County, there is once again cause for celebration, especially if you live in Nebraska.

In Tyler, the Court unanimously ruled that Minnesota’s use of home equity theft—when governments and their private partners satisfy property tax debt by taking a person’s home, selling it, and keeping more than the amount owed—was unconstitutional.

At the heart of the matter was the question of whether home equity theft violates the right to just compensation promised by the Fifth Amendment’s Takings Clause. Relying on judicial precedent and historical principles dating all the way back to Magna Carta, the Court agreed with PLF that it does.

This is excellent news for our Minnesota-based client, Geraldine Tyler, but the landmark decision has implications that extend far beyond her home state.

This week, the spotlight is on Nebraskans for taking a stand against home equity theft, both in the courts and in the legislature.

Granted, vacated, remanded

While Tyler was being argued at the Supreme Court, the fate of two additional home equity theft cases hinged on its outcome: Fair v. Continental Resources and Nieveen v. TAX 106.

This term, Pacific Legal Foundation filed three writs of certiorari—requests for the Supreme Court to hear a case—regarding home equity theft. One of those cases, Tyler, was accepted by the Court, and the other two cases, both Nebraska-based, were placed on hold pending the Court’s forthcoming decision.

With Tyler decided, the Court could then choose either to address Fair and Nieveen or reject them entirely. On Monday, both cases were granted their respective writs of certiorari, BUT that didn’t exactly mean what it meant for Tyler.

Like most traditional Supreme Court cases, Tyler was accepted and argued, with Justices handing down a written opinion once a decision had been reached. Fair and Nieveen, on the other hand, were “GVR’d,” or “granted, vacated, and remanded.”

What’s the difference? There are certain circumstances where GVRs make more sense than the traditional path in a Supreme Court case. For example, in this situation, both Fair and Nieveen’s legal questions had already been addressed through the Tyler decision, so there was no need for oral arguments or separate opinions.

Once GVR’d, the lower court’s ruling is vacated—overturned—and the case is sent back for re-consideration.

A GVR’d case is a Supreme Court win for the client. It generally doesn’t have a written opinion and so doesn’t set a legal precedent—but it’s a victory, nonetheless. In the instance of Fair and Nieveen, they are wins in the fight to eliminate home equity theft. And that is a reason to celebrate.

Now, our two clients can go back to the Nebraska courts and continue fighting home equity theft, this time armed with the Tyler decision to help them.

And that’s not the only good news for ending home equity theft in Nebraska.

Changing the law

The fight to end home equity theft has always been a war on two fronts: in the courts and in the statehouse.

The Tyler ruling gives individuals the power to make their case against home equity theft in the lower courts where they had previously been unsuccessful. But it doesn’t actually change the law to abolish the practice altogether. That is a job for state legislatures.

This week, Nebraska governor Jim Pillen signed LB 727 into law, which included an amendment to abolish home equity theft in the state. State legislators modeled the Nebraska bill after Pacific Legal Foundation’s framework legislation that our policy team created to help lawmakers pass the necessary reforms in the 12 plus states that use home equity theft.

Using our framework, along with help from our friends at the Platte Institute and Nebraska Legal Aid, state legislators were successful in their valiant efforts to protect individuals from this shady tax scheme.

For our client Kevin Fair, Nebraska’s latest legislative victory, coupled with his case being GVR’d, could mean the difference between having a roof over his head and living on the streets.

A new hope

In 2014, Kevin Fair and his wife, Terry, were unable to pay their $588 property tax bill. Terry was fighting for her life after MS took hold of her body, and every cent they had was going toward her medical care.

While consumed with the grief of Terry’s prognosis, paying the past due taxes was not at the forefront of Kevin’s mind.

Unbeknownst to him, the city of Scottsbluff, Nebraska, took the home to satisfy the debt and sold it to a private investment firm. The only warning the city provided was a notice printed in a local newspaper that Kevin never read.

It was not until 2018 that Kevin was notified that he no longer owned his home, and if he wanted to keep it, he’d have to pay the private investment firm $5,200 within 90 days. He simply didn’t have the money, nor did he have the credit he needed to take out a loan.

He tried to fight back in court but lost in the lower court. He then appealed to the Nebraska Supreme Court, but the court ruled against him, stating that home equity theft was not unconstitutional. Not only was he then facing homelessness, but in the midst of the legal battle his wife lost her own battle with MS.

That’s when Pacific Legal Foundation filed a writ of certiorari on behalf of Kevin. With the Tyler victory came the GVR, which sends the case back to the Nebraska Supreme Court to reevaluate its opinion in light of the new precedent.

Now that Nebraska has officially abolished the use of home equity theft, PLF will be filing a status report on both Fair and Nieveen, advising the court about the Supreme Court updates as well as the new law. Under the changed circumstances, we hope to resolve the case quickly in a just manner that keeps our clients in their homes.

With all these latest developments in mind, Kevin now has hope in what once seemed like a hopeless situation.

What’s next?

There is still work to be done to bring an end to this tax scheme once and for all.

The win in Tyler was the first major step toward ending home equity theft for good, across the entire country. Now it’s up to state courts and lawmakers to bring the fight to the finish line.

Well done, Nebraska. This may be the first state victory post-Tyler, but it won’t be the last.