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

If you go check out the website of Pacific Legal Foundation, this is one of the stories you will see on the website

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.

Quite surprising, yes. But what is more surprising, however, is the fact that something that is legal in a lot of states, including Minnesota, as the Pacific Legal Foundation explains.

That may sound like an extreme and unusual case. But in fact, this type of tax forfeiture abuse, called home equity theft, is completely legal in 13 states.

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.

In July this year, the Michigan Supreme Court rules in favor of Uri Rafael, “preventing the government from foreclosing on private property for unpaid property taxes, and keeping all the proceeds“. But this is not something that should be happening or be a possibility for anyone, especially in Minnesota where too many rules exist already making housing very costly.