Wisconsin eliminates home equity loophole following Supreme Court case last term

Madison, WI; March 25, 2024: Last Friday, Governor Tony Evers signed into law Assembly Bill 969, which completely ends home equity theft in Wisconsin.

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

“It’s been almost a year since the Supreme Court ruled that home equity theft was unconstitutional,” said Kileen Lindgren, legal policy manager at Pacific Legal Foundation. “While some states are dragging their feet, it’s encouraging to see others, like Wisconsin, do what is necessary to protect homeowners’ property rights. There’s still more work to be done, but we are confident that Wisconsin is not the last domino to fall in line.”

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 eight others allow it in certain circumstances.

In 2022, Wisconsin passed Senate Bill 829, which was a step in the right direction that banned home equity theft in many circumstances but left open a loophole that allowed local governments to foreclose on property and keep it, rather than selling it and returning the excess proceeds to the homeowner. The current bill, sponsored by Rep. William Penterman and Sen. Rob Stafsholt, closes that loophole.

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.