The Supreme Court Takes Up 'Home-Equity Theft' - WSJ [View all]

Geraldine Tyler never thought she’d end up in front of the U.S. Supreme Court—especially at 94. But she also never imagined the government would seize her Minneapolis home and sell it. Ms. Tyler is a victim of what’s often called home-equity theft, but this form of robbery isn’t criminal; in fact, it’s legal in a dozen states. The Supreme Court, which hears oral arguments Wednesday in Tyler v. Hennepin County, has the opportunity to end these predatory tax foreclosures once and for all.

Ms. Tyler’s trouble began when she moved into a senior residence in 2010 and fell behind on her property taxes. She ended up owing Hennepin County roughly $2,300. After tacking on penalties, interest and related costs, her debt ballooned to $15,000. To collect what it was owed, Hennepin County seized and later sold the one-bedroom condo for $40,000. You might think the county would settle the $15,000 debt and return the $25,000 balance to Ms. Tyler. But the county took all $40,000 and left her with nothing to show from her only significant asset.

Most states treat property-tax collection like other debts, only taking as much as the government is owed. But Minnesota is one of 12 states, plus the District of Columbia, that regularly take a windfall when collecting delinquent property taxes. Several more states that typically protect property-tax debtors have created special loopholes that allow the government to take a windfall so long as it uses the property for public purposes.

As a result, thousands of owners are robbed of their equity every year. A recent study by Pacific Legal Foundation found that governments seized at least 8,950 homes between 2014 and 2021. That’s only the tip of the iceberg since the study could only examine a limited sample of foreclosures in these states. The total losses suffered by the debtors—usually elderly, sick or poor—are shocking. In Massachusetts alone, the government took $56 million in equity between August 2013 and July 2014, according to research by University of Massachusetts law professor Ralph Clifford.

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https://archive.is/WDIa4

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I don't know why Minnesota has to be one of the 12 states to follow this harsh treatment