After losing his wife, a Nebraska man lost his home to an unconstitutional state tax scheme

April 07, 2023 | By BRITTANY HUNTER
Kevin Fair, determined advocate, addressing a diverse audience with conviction and purpose.

Losing a spouse is one of the most devastating events a person can experience. Losing the home wherein you made all your memories together immediately after adds an extra layer of grief no one should have to carry.

Kevin Fair and his wife Terry lived in their Scottsbluff, Nebraska, home for nearly two decades. Kevin’s mother gave them the home as a wedding gift. It wasn’t extravagant or flashy, but it was theirs and it’s where they built a life together.

Life is filled with unexpected twists that turn everything upside down. For the Fairs, their lives changed forever in 2013, when Terry was diagnosed with multiple sclerosis (MS).

Her health began to deteriorate quickly. With the strain of the disease on her body, she was no longer able to do her job at Walmart and was let go. Already in a financial bind, the couple now had to find a way to get Terry the full-time care she needed.

At first, they paid a professional to come to their home and care for Terry. But the costs were unsustainable. Ultimately, Kevin had to make the difficult decision to quit his job and become his wife’s full-time caretaker.

Kevin’s Social Security check became the only stream of income the couple had. Their financial situation had already been tight, but with medical bills and a fixed income, things grew dire.

Terry’s care was Kevin’s first priority, but that meant falling behind on other bills. When it came time for the Fairs to pay their 2014 property taxes, they simply couldn’t afford the $588 bill.

While he was aware that the bill was unpaid, Kevin had absolutely no idea that the government had already taken steps to seize his home.

Kept in the dark

The government never sent a letter to the Fairs notifying them that they were in jeopardy of losing their home. Instead, officials complied with state law by placing a delinquent notice in a small, local newspaper. Unless you knew to look for it, you would never even know it was there.

Kevin never read that paper, so he never saw the notice.

Without action taken by the unsuspecting Fairs, the county quietly sold the tax lien on their home to a private investor, Continental Resources, for the cost of the unpaid debt. The tax lien gave the investor the unusual power to collect that debt with 14% interest and then take the entire home if not paid within a few years.

Continental quietly sat on that lien for a few years, paying the next two years’ taxes, so the county didn’t even send the Fairs a tax bill. No one sent them a warning until 2018. Continental told Kevin that he could keep his property if he could come up with $5,200—the total of everything he owed when fees and interest were added—within three months.

There was no way Kevin was going to be able to come up with the money. He was already preparing to lose his wife and now he was faced with the horror that he would soon lose his house.

The only family he had left was his wife and his mother, his friends had all passed away, and there was no one else turn to. He wasn’t in a position to take out a loan. Everything seemed hopeless.

The Fairs’ home was worth about $60,000. Even after accounting for three years of property taxes, the home was still worth much more than what they owed.

A shady tax scheme

In about 12 states and Washington, DC, governments use a tax scheme called home equity theft against property owners who have fallen behind on their taxes. Home equity theft allows governments to take a person’s home, sell it, and keep every penny.

Many, like Kevin, are not even aware they are in danger of losing their home until the process is well under way. In fact, some find that official letters never arrived, or they arrived after it was too late to do anything to remedy the situation.

Home equity theft is not only shady, it’s also illegal.

Falling behind on your property taxes does not make your property rights evaporate. Yes, taxes must be paid, and the government has the right to come collecting on a delinquent bill. But the government does not have the right to take more than what is owed.

Instead of stealing the Fairs’ home and all its equity, the government could have treated the debt like a mortgage or other normal debt, selling it for its highest price, kept the money that was owed, and given the rest to the couple—which is what happens in most states. But it didn’t—it stole the home and gave it to a private firm for pennies on the dollar.

The Constitution is clear that a government cannot take a person’s property without just compensation. This protection, which is guaranteed in the Fifth Amendment, is called the Takings Clause because it establishes the rule that if a government is going to take property from you, it must pay for it.

By giving away the Fairs’ home equity to Continental Resources, the government appears to think itself above the Constitution.

With help from Michael W. Meister, Jennifer Gaughan, and Mark T. Bestul from the nonprofit Legal Aid of Nebraska, the Fairs sued in state court to protect Kevin’s property rights and have Nebraska’s home equity theft laws declared unconstitutional.

Unfortunately, the Fairs lost their case. It was during this time that Kevin said his final goodbyes to Terry.

Despite his grief, Kevin continued to fight. He appealed to the Nebraska Supreme Court, hoping they would do a better job than the lower court at upholding his constitutional rights.

In March 2022, the state supreme court denied his due process, takings, and excessive fines claims.

But Kevin hadn’t reached the end of the road yet.

Represented free of charge by Pacific Legal Foundation, Kevin has asked the U.S. Supreme Court to end home equity theft in Nebraska and stop government from creating windfall opportunities for private entities through private property transfers.

For now, Kevin still lives in his home. The Supreme Court has put a hold on reviewing Kevin’s case, pending the outcome of another PLF home equity theft case, Tyler v. Hennepin County, that will be argued before the Court at the end of April.

If the Supreme Court rules in our client’s favor, property owners across the country hopefully will never have to endure the stress and legal battles that Kevin and so many others have had to. And if it does not, PLF will continue to fight to end home equity theft in every state.