Tawanda Hall is a Michigan-based nursing assistant and a mother of four. For nearly a decade, she raised her family in a home she and her husband purchased in the city of Southfield.
Like many people, the Halls experienced financial difficulties that caused them to fall behind on their property taxes.
The family had no intention of ignoring their past-due taxes. They wanted to pay off their debt and worked with their local government to get on a payment plan.
The Oakland County treasurer ended the plan, however, with the tax debt standing at $22,642, and foreclosed on the Halls’ home.
The county then transferred the home through the City of Southfield to a private company, Southfield Neighborhood Revitalization Initiative, LLC, which sold it for more than $300,000, about $260,000 more than Hall owed.
While the company itself may be private, it’s managed by City of Southfield officials.
The Detroit News reported that the company generated as much as $10 million from 138 properties from 2016 to 2019 after covering more than $2 million in tax debts to acquire the properties from the city.
“The government should not be allowed to steal from its own people and give it over to their friends,” Pacific Legal Foundation attorney Christina Martin told Stossel.
Governments are allowed to take what is owed when a person falls behind on their tax payments.
In states that don’t practice home equity theft, governments that take homes over unpaid tax bills typically sell the homes at auction and then give the homeowners the surplus left after satisfying the owed debt.
But governments are constitutionally forbidden from taking even a penny more than they are owed.The Takings Clause of the Fifth Amendment requires governments to give just compensation when they take an individual’s property.
As Martin explains, home equity theft is “unjust and it’s unconstitutional.”
Home equity theft robs individuals, not only of the equity they accumulated on their property, but also of their homes, which hold sentimental value as well as monetary value.
As Stossel points out in his video, Hall is just one of many who have had their lives impacted by home equity theft.
In Massachusetts, our 67-year-old client, Deborah Foss, is currently living in her car after her local government used home equity theft to take her home over an unpaid tax bill.
The property’s market value is $241,600, and Deborah owed only about $30,000. But instead of ordering the company to turn back to Deborah the roughly $210,000 in equity she retained in the home, the Land Court held that Massachusetts law allows the company both to take her home and to keep the equity.
Foss lives on a fixed income and suffers from several medical conditions, including chronic lymphocytic leukemia, COPD, and neuropathy, further adding to the obstacles she is facing now that she’s homeless.
Deborah’s friends and family set up a GoFundMe page to help her through this difficult time.
For one man who fell prey to his local government’s use of home equity theft, the outstanding tax balance was under $10.00.
Michigan-based Uri Rafaeli was always diligent in making his tax payments. But in 2011, he miscalculated the amount he owed by a whopping $8.41 cents—scarcely the cost of two lattes from Starbucks.
That didn’t stop the county from foreclosing on his home.
PLF represented Rafaeli, which resulted in the Michigan Supreme Court ruling that counties cannot steal the savings people have stored away in their homes.
That wasn’t our only success. Pacific Legal Foundation has helped end home equity theft in three different states.
But the fight is not over.
We are fighting to end home equity theft in the remaining 11 states where this unconstitutional practice is still allowed to occur, and to protect homeowners from losing everything over minor property tax debts.
Watch the full Stossel video here.