DFLers push bill to protect ‘home equity theft’

Last year, I wrote that:

In 2015, Hennepin County seized Geraldine Tyler’s Minneapolis condo “over about $2,300 of unpaid property taxes, plus $12,700 in penalties, interest and fees.” The county sold the condo for $40,000 and pocketed the $25,000 difference.

Ms. Tyler took Hennepin County all the way to the Supreme Court to end this practice of “home equity theft.” I wrote last April, “I am not a lawyer, so I do not know if Ms. Tyler will win. I do know that I hope she does.” I am happy to say that, in a unanimous decision, she did, in the case of Tyler v. Hennepin County.

States have responded to this judgement in different ways. It will probably not surprise you to find that Minnesota is one of the ones responding in a bad way.

Jim Manley of the Pacific Legal Foundation writes:

When Tyler was decided, 22 states, plus the District of Columbia, had home equity theft laws on the books. Since then, four states—Idaho, Nebraska, Maine, and South Dakota—have banned home equity theft.

Many other states have home equity protection bills pending. States like Colorado lead the pack, with complete reforms that protect equity, create robust notification procedures, and provide straightforward processes for property owners to claim surplus equity after a tax sale. If equity goes unclaimed, it is treated as unclaimed property.

Other states, like South Dakota, have put a stop to taking surplus equity but will consider more comprehensive reforms next session.

But some proposed reforms land in a troubling third category. Bills like Arizona SB1431 and Minnesota HF4822 continue to let governments or their tax investor allies take more than is owed—unless property owners file a request in court demanding the return of their equity.

That’s a policy that is designed to fail—and to violate the Constitution.

HF 4822 is authored by Reps. Sandra Feist (DFL), Brion Curran (DFL), and Jay Xiong (DFL). In a state which already imposes some of the highest taxes in the country, this grubby attempt to chisel a few more dollars out of its citizens is not only unconstitutional, but wholly unnecessary. Let us hope it goes nowhere.