PLF wins North American Liberty Award for defeating home equity theft at the Supreme Court
Pacific Legal Foundation’s 2023 Supreme Court victory in Tyler v. Hennepin County changed lives—and is now being recognized for advancing freedom and human progress in America.
For years, local governments across the country manipulated tax forfeiture laws to steal from vulnerable Americans—most of them ill, elderly, jobless, immigrant, or struggling homeowners who fell behind on property tax payments. The government didn’t just take what it was owed. It took whole houses over debts as low as $8.41.
But because PLF gave the practice a name—home equity theft—and defeated it at the Supreme Court in 2023, the scheme is being shut down. States are reforming their laws to protect property owners’ rightful equity.
For defending home equity theft victims at the Supreme Court, the Atlas Network is now recognizing PLF with the North American Liberty Award. “America’s property-owners are lucky to have Pacific Legal Foundation on their side,” Atlas Network CEO Brad Lipps said in a release.
How PLF discovered the problem
The story of how PLF uncovered and defeated home equity theft is a sweeping story that involves multi-year legal battles waged in state and federal courts, surprising meetings with legislators, and a new alliance with groups across the political spectrum.
Like most great stories about change, it starts with one person.
Christina Martin was a young attorney at PLF in 2014 when she read about the curious case of Benjamin Coleman, a veteran with dementia who’d lost his Washington, DC home in a tax foreclosure. That in itself was tragic—but what caught Christina’s attention was how small Benjamin’s tax debt was: He hadn’t paid a $134 tax bill, and for that, the government had seized his entire home, valued at $197,000, and kept it all.
“That’s stealing,” Christina says.
She started telling colleagues at PLF about Benjamin’s case, pushing for our firm to get involved. Initially, PLF’s leadership was skeptical. It seemed too crazy: Could the government really be stealing hundreds of thousands of dollars from low-income Americans?
But once Christina went through the facts, the skepticism turned to outrage. Benjamin had filed a lawsuit, survived a motion to dismiss, and was now facing another motion that was bold enough to assert that he had no property rights that had been taken from him—despite the fact that he had lost not just the right to his property itself, but to all the equity he had in it. It turned out other states were engaging in the same sort of actions.
“At that point, everyone understood: Wow, this is incredible that this is happening to people,” says Larry Salzman, PLF’s director of litigation.
Christina now had a green light—not just to file an amicus brief in support of Benjamin Coleman, which she did, but to work with others at PLF to investigate the broader issue. How often did this happen? Which states allowed it? How many people had been robbed by their own government?
The investigation
PLF’s legal policy and strategic research teams discovered that at least 16 states allowed counties to keep surplus profits from property tax foreclosures, and seven more states permitted the practice in limited situations. Thousands of Americans in these states had fallen victim to what PLF dubbed “home equity theft.” In the seven-year period PLF studied, more than three homes a day had been seized. Collectively, these victims had lost at least $780 million.
PLF’s research also showed who tended to be impacted by home equity theft: Elderly, sick, low-income, and minority Americans were most at risk.
Meanwhile, some in the government were gloating about the properties they’d seized.
“This is a major asset,” the treasurer of Cook County, Michigan, boasted in 2014 after the county seized a large home. The homeowners tried to pay their property tax debt by check, but the treasurer sent the check back. She didn’t want the money. She wanted the home, which was worth more than the money owed. In private emails between county employees that were eventually shared with PLF, the treasurer said she was “tickled pink” by the acquisition.
“Have you ordered a new living room set for it yet?” one employee replied. “When is the first cookout?”
By allowing counties to keep surplus profits from tax foreclosures, states had created a perverse inventive for the government to prey on vulnerable Americans. And the government was getting away with it.
PLF set our goal
After Christina filed an amicus brief in Benjamin Coleman’s case, a few attorneys reached out to PLF about similar cases.
In 2017, Christina took on the case of Uri Rafaeli, an elderly Michigan man who’d underpaid his taxes by only $8.41. While Christina and other PLF attorneys litigated Uri’s case in state court, PLF’s communications team put a national media spotlight on Uri’s case. The facts—a man losing his entire home over an $8.41 debt—shocked people. “Michigan county seized retiree’s home over $8 debt,” Fox News announced after PLF shared Uri’s story.
Uri’s case went to the Michigan Supreme Court. At oral arguments, Christina described what the county had done and told the Justices, “In common parlance, people call that stealing.”
The Michigan State Supreme Court agreed and sided with Uri.
Meanwhile PLF was busy litigating other cases. We represented a grandmother forced to live in her car through a Massachusetts winter; a Guyanese immigrant in New Jersey who had no idea she owed property taxes until it was too late; a widowed nursing assistant in Michigan who didn’t see a penny after her home was seized and sold for over $300,000; and many others, including an alpaca farmer, a grandfather, and a small church.
One thing that PLF realized while fighting to end home equity theft: Even state legislators didn’t realize this was happening in their own states. When Christina found herself at a Montana property rights conference with a captive audience of state legislators, she started telling them about Uri Rafaeli’s case. “But before you start to judge the government in Michigan, you need to look at home,” she added. “Because Montana’s doing the same thing.”
Their jaws dropped, she remembers.
Afterward, a state senator approached Christina and said he’d try to fix Montana’s laws. PLF helped him draft a bill that passed, thanks in large part to our policy team’s on-the-ground work to educate state legislators about the requirements of the Constitution. Other states, inspired by PLF model legislation, later passed similar bills: North Dakota, Nebraska, and Maine eventually ended home equity theft voluntarily, with PLF’s help.
But PLF aimed higher. In 2020, Christina told PLF’s leadership that we could end all home equity theft in America in five years.
“And I meant it,” she says. “I believed it. Because I’m at Pacific Legal Foundation, and we can actually get to the Supreme Court.”
Going to the Supreme Court
An attorney in private practice reached out to Christina around this time.
He was representing a victim of home equity theft: a 94-year-old Minneapolis grandmother named Geraldine Tyler. For years Geraldine had lived in a one-bedroom condo in the city. After becoming nervous in her neighborhood, she moved into a safer senior community and wasn’t able to keep up with the property taxes on her condo. Hennepin County, Minnesota, seized and sold Geraldine’s home.
Geraldine’s attorney thought he had a good chance of winning at district court. But Christina had more experience at this point; she knew the odds were long.
“When you lose,” she told the other attorney, “let me do the appeal.”
He did. In December of 2020 when he lost in the trial court, he asked PLF to take the case on appeal. PLF fought for Geraldine in the Eighth Circuit but lost in 2022. Later that year, we asked the U.S. Supreme Court to hear Geraldine’s case. “The nationwide consequences of this practice are shocking,” we told the Justices in our petition, “depriving thousands of vulnerable and often blameless owners of their entire interest in homes and land over debts as small as $8.”
The Supreme Court receives about 8,000 petitions every year and grants fewer than one percent. But it granted our petition for Tyler v. Hennepin County.
PLF attorneys worked together on the briefing and to prepare Christina—who’d never before argued at the Supreme Court—for oral arguments. Meanwhile PLF coordinated with dozens of organizations across the political spectrum—including the ACLU, AARP, Public Citizen, and Cato Institute—who prepared amicus briefs in support of Geraldine.
Remarkably, the county submitted a brief to the Court defending home equity theft by pointing to a 13th-century law that allowed feudal lords to take their tenants’ land if “quit rents” were not paid on time. In our pointed reply brief, we argued that Geraldine Tyler “was not a vassal owing fealty to her lord, but a modern-day fee simple owner of real property.”
That line struck a chord with the Supreme Court: At oral argument on April 26, 2023, Justice Neil Gorsuch took out our brief and read the line aloud. Christina was clear and confident as she stood before the Justices and explained that home equity theft violated the Fifth Amendment’s Takings Clause.
Geraldine wasn’t in the courtroom—at 94 she wasn’t well enough to make the trip—but Tawanda Hall, the Michigan nursing assistant whom PLF had already won a victory for at the Sixth Circuit, sat in the courtroom on behalf of all victims to watch history be made.
After the argument, Tawanda told an audience of PLF staff, supporters, and allies what the day had meant to her.
“I’m so proud of everyone here trying to save families,” she said. “I just thank you all for everything you are doing.”
The impact
A month after the argument, on May 25, the Supreme Court announced its decision: A 9-0 ruling that home equity theft is, in fact, unconstitutional. PLF had won.
“The taxpayer must render unto Caesar what is Caesar’s,” Chief Justice John Roberts wrote in the decision, “but no more.”
The fight is not over completely: When the Supreme Court rules a law unconstitutional, that law doesn’t simply disappear; jurisdictions still need to pass legislation to reform and replace bad laws. The current phase of PLF’s home equity theft work—already supported by a grant from the Atlas Network—is focused on ensuring that states correctly reform their laws and that counties actually comply with the Tyler decision.
But our Supreme Court victory is the beginning of the end for home equity theft.
Less than a decade ago, home equity theft was an issue that had no name. Its victims, already struggling to make ends meet, had no champions to lift up their cause. Bureaucrats were plotting to steal homes and profit off them. The people harmed by home equity theft were basically forgotten by society, Christina says. “They don’t have a voice, typically. They don’t know their rights.”
That has now changed. The Tyler precedent will protect Americans in court for generations. The national spotlight PLF put on home equity theft ensures people now know their rights.
Before PLF uncovered home equity theft, three American families a day were being dealt the unimaginable blow of losing their most valuable asset over a small tax debt. Local governments were stealing over $111 million per year from struggling homeowners. Now, as jurisdictions reform their laws in the wake of PLF’s Tyler victory, the number of dollars stolen will dwindle to zero.
That impact, of course, is felt most keenly by victims like Geraldine Tyler, Tawanda Hall, and Uri Rafaeli. But even those who weren’t personally affected by home equity theft, and who don’t usually support PLF’s mission, have been celebrating. Once Pacific Legal Foundation brought attention to home equity theft, there seemed to be universal left-right agreement that it was a blatant violation of human rights.
Tyler was “a true unicorn of a case,” Mother Jones wrote, because the decision “made just about everyone happy for once.”
One attorney wrote on Twitter: “I don’t always agree with Pacific Legal, but man are they on the right side of this one.”
