Minnesota is one of the 13 states where its legal for the government to steal home equity

Imagine the following,

Uri is a retired 83-year-old Michigan engineer, and in 2014 he accidentally underpaid, by $8.41, the property taxes on a home he rented out. But instead of notifying him of the issue and helping him, his county government seized the home and sold it at auction for $24,500. The county then kept all the proceeds—leaving Rafaeli with nothing.

For an $8.41 bill, Uri ended up paying tens of thousands more.

Unfortunately, according to the Pacific Legal Foundation, this practice is not just limited to Michigan. In Minnesota, and 12 other states, it is legal for the government to steal home equity for non-payment of property tax.

In Alabama, Colorado, Maine, Massachusetts, Michigan, Minnesota, New York, North Dakota, Oregon, and Wisconsin, governments not only keep the value of unpaid property taxes and interest from the sale of a seized home—they also keep the surplus value rather than returning it to the property owner. In Arizona, Colorado, Illinois, Massachusetts, and Nebraska, private investors often reap the gains of home equity theft.

The situation in Michigan, where Uri Rafaeli lost his property, illustrates the scope of the abuse. Between 2013 and 2018, local government entities in Michigan foreclosed on more than 150,000 properties for unpaid taxes.

To be clear, such tax foreclosures can be a useful tool for municipalities to enforce and collect unpaid property taxes or utility debts. However, in these 13 states, local governments or private investors are allowed to steal all of a homeowner’s equity. In Uri Rafaeli’s case, Oakland County, Michigan, stole more than $24,000 in equity from him.

…..For example, in Massachusetts, municipalities took more than $56 million in home equity from property owners in a single year, according to a study by University of Massachusetts School of Law Professor Ralph D. Clifford.

Fortunately for Uri, the Michigan Supreme Court ruled in his favor. For residents in other states, including Minnesota, however, this theft continues.