Idaho bans home equity theft following Supreme Court case last term

Boise, ID; March 12, 2024: Today, Governor Brad Little signed into law House Bill 444, which ends home equity theft in Idaho.

The bill, sponsored by Rep. Jeff Ehlers and Sen. Phil Hart, removes a loophole in the law that allowed local governments collecting tax debts to foreclose on a homeowner’s property and give it to any federal or Idaho state government, without providing just compensation to the owner for any excess equity lost in the foreclosure.

Idaho is the fourth state — along with Nebraska, Maine, and South Dakota — to ban home equity theft since the Supreme Court unanimously ruled in Tyler v. Hennepin County that home equity theft is unconstitutional.

“It’s encouraging to see Idaho step up to protect homeowners’ property rights,” said Jim Manley, state legal policy deputy director at Pacific Legal Foundation. “The Supreme Court made clear that home equity theft is unconstitutional. It’s time for every state that allows this illegal scheme to amend their laws to protect homeowners’ hard-earned equity. Pacific Legal Foundation will continue fighting until home equity theft is eradicated nationwide.”

As Chief Justice John Roberts wrote in his unanimous Tyler opinion: “The taxpayer must render unto Caesar what is Caesar’s, but no more.” Yet today, nine states, plus the District of Columbia, continue to have home equity theft laws on their books, while nine others have  to allow it in certain circumstances.

Pacific Legal Foundation is advising policymakers in several states on how to protect homeowners and has published policy guidelines and model legislation so that states can end home equity theft once and for all.