Supreme Court asked to enforce the constitutional right to proper notice in tax foreclosures
September 04, 2020
Washington, D.C.; September 4, 2020: Can the government give a private company tax-delinquent land—and the owner’s equity in it—without providing adequate notice to the property owner? That’s the question that Walter Barnette is asking the U.S. Supreme Court to answer.
Barnette owned a plot of land in an Omaha, Nebraska, suburb, but fell on hard times and was unable to pay his property taxes on the lot. To settle his $986 debt, the county sold a tax lien on the property to a private investor, commissioning the investor with providing Barnette with notification guaranteed by law.
The investor sent certified mail to Barnette’s address in Council Bluffs, Iowa, but he wasn’t home to claim it. When the certified mail was sent back to the investor unclaimed, an ad was placed in a small Sarpy County newspaper announcing that the County would soon take the property and give it to Pontian. But Barnette is owed due process, and Supreme Court precedent makes it clear that that the government cannot deprive a person of property without proper notice. Sending a regular letter or picking up the phone would have been far more effective than publishing a notice in an obscure newspaper.
“The consequences of inadequate notice of tax foreclosure are often devastating in states like Nebraska that take the full value of property, no matter how small the tax debt,” said Christina Martin, a senior attorney at Pacific Legal Foundation, which represents Barnette free of charge. “It was unconstitutional for government to take Barnette’s acre of land — worth $25,000 — as payment for $1,700 in taxes, penalties, interest, and costs. When consequences are that devastating, the government must ensure better notice than a failed attempt at certified mail and publication in a weekly newspaper. If you are late on your internet bill, you get far more notice, including letters, text messages, and phone calls.”
“We hope the U.S. Supreme Court takes Walter’s case and sends a clear message to Nebraska and all states that Americans must receive adequate notice before government forecloses and gives a windfall to other private parties.”
The case is HBI, LLC v. Barnette.
Adequate notice is just one aspect of “home equity theft”—an unconstitutional process by which local governments in 12 states and private investors profit by taking entire properties to settle tax debts. In July, the Michigan Supreme Court ended the practice in that state after Uri Rafaeli challenged the taking of his house to settle an $8.41 debt. PLF fights to end home equity theft about a dozen states where it’s permitted.
Pacific Legal Foundation is a national nonprofit legal organization that defends Americans threatened by government overreach and abuse. Since our founding in 1973, we challenge the government when it violates individual liberty and constitutional rights. With active cases in 34 states plus Washington, D.C., PLF represents clients in state and federal courts, with 14 victories out of 16 cases litigated at the U.S. Supreme Court.