Property Tax Mistake Lead to Confiscation of Home

If you make a mistake in your property taxes and end up owing to the state government, your property might be confiscated and sold. That is what happened in the case of a Detroit family who years later found that they had made a mistake in calculating their property taxes, which lead to underpayment. The result was that their home was confiscated and sold to pay off the tax debt. WND shares: 

“The Pacific Legal Foundation is defending a Detroit family whose apartment complex was confiscated by the government for unknowingly missing a $144 property tax payment. 

PLF filed a lawsuit after Wayne County seized the $108,000” fourplex, sold it and kept the money.

Erica Perez and her father, Romualdo, bought the building for $60,000, noted PLF’s Christina Martin. 

‘They were pursuing their American dream. Romualdo has family in Detroit, so part of his retirement plan was to fix up the complex, along with a small home next door, and spend his golden years with his family, renting his units to people who needed a good, affordable place to live,’ Martin wrote in a blog post. 

Tens of thousands of dollars and countless hours went into repairs. 

Then Wayne County issued a notice that they had failed to pay $144 in taxes, which had ballooned to $500 with penalties. 

But the county’s solution was drastic. 

‘Despite paying all their other taxes — more than $3,500 since they’d bought the property – Erica and Romualdo mistakenly underpaid their 2014 property taxes,’ the report said. But they had no idea about the debt. Otherwise, they would have paid it.’ 

PLF is suing Wayne County for violating the state and U.S. constitutions ‘by stealing home and land equity.’ 

‘By refusing to refund the extra profits from the sale of Erica and Romualdo’s apartment complex, Wayne County violated their constitutional property rights — rights that our nation’s Founders intended to protect,’ she explained. 

The county’s seizure was allowed under state law. But the case now is part of PLF’s campaign to end the ‘abusive practice of home equity theft.’ 

The campaign focuses on Michigan and nearly a dozen other states where the law allows the government, under certain circumstances, to seize private property, sell it and keep all the money. 

‘Consider the case of Uri Rafaeli, who owned a rental property in Oakland County, Michigan. He mistakenly underpaid his property taxes by $8.41. To cover the debt, the county sold the property at auction for $24,500 and kept every penny of the proceeds. Mr. Rafaeli is fighting the theft of his home equity at the Michigan Supreme Court, which will hear oral arguments in the fall of 2019,’ the organization said. 

‘Why would governments do this? We’ve found two reasons,’ the organization said. ‘Local governments can pad their budgets with stolen equity. In Detroit, there’s a budget line every year for expected windfalls from home foreclosures. Some politicians use the system to reward their friends and family with homes priced below market. In Montana, before the practice was banned, local treasurers sold foreclosed homes to preferred private investors.’ 

It’s not the first such situation that has developed.”