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It’s unfortunate when government takes someone’s home over a minor property tax debt. But in some places, government can take the home’s entire equity too.
This practice is called Home Equity Theft—when governments (or third-party private investors) sell foreclosed property and keep all the proceeds, not just the taxes owed.
And when this happens, it’s devastating. In one case, Michigan resident Uri Rafaeli owed his county just $8.41 in unpaid property taxes on a modest rental home that shored up his retirement income.
It didn’t matter to the government that the tiny tax debt was a miscalculation. Nor did it matter that a home’s equity is just as much property as the home itself, and just as protected by the Constitution. The county seized Uri’s property, sold it at auction for $24,500, and pocketed every last cent.
The bad news? Home Equity Theft is legal in 12 states (below in red). The good news? It used to be legal in several more, but no longer, thanks to the work of Pacific Legal Foundation and our allies.
We invite you to learn more about how home equity theft is happening in your state, and potential legal and legislative remedies.
PLF staff will share stories, state-specific research, and pending litigation to end the practice in your state.
