February 1, 2023
FOR IMMEDIATE RELEASE
Chief of Legal Strategy
Phone: 402-348-1069 ext. 204
The U.S. Supreme Court will decide whether home equity theft laws violate the Constitution. These laws, which exist in a minority of states including Nebraska, allow state and local governments to seize the entire value of a home as payment for a much smaller property tax debt.
The challenges to the government’s process for selling real estate tax liens were presented to the Supreme Court in two separate but similar cases from Nebraska as well as in a Minnesota case. The U.S. Supreme Court announced that it will hear arguments in the Minnesota case: Tyler v. Hennepin County.
The first Nebraska case involves an elderly couple, Kevin and Terry Fair, who lived in their Scottsbluff home for nearly three decades. When the Fairs fell behind on their property taxes, the county transferred the couple’s $60,000 home to a private investor. The investor paid off the Fairs’ $5,268.00 debt to the county, pocketing the surplus equity as profit.
The second Nebraska case involves Sandra Nieveen, an elderly woman who lived in her Lincoln home for nearly fifty years when the county transferred her $61,900 home to a private investor for a tax debt of less than $4,000.
Legal Aid of Nebraska represented the homeowners and argued both cases in front of the Nebraska Supreme Court, which upheld the law. Pacific Legal Foundation, which works to end home equity theft in the states where it is still practiced, agreed to represent Mr. Fair and Ms. Nieveen in the U.S. Supreme Court free of charge, with Legal Aid of Nebraska remaining local counsel.
The Minnesota case, Tyler v. Hennepin County, involves a municipality that seized a private residence to satisfy a $15,000.00 tax debt. The County sold the home for significantly more than the amount of the debt, keeping $25,000.00 in surplus funds. Pacific Legal Foundation agreed to represent the homeowner in challenging the government’s right to take and keep the property’s surplus value.
At this time, the Nebraska cases remain pending in the U.S. Supreme Court. It is likely that the outcome in the Tyler case, which may be decided as early as June, will impact the result in the two Nebraska cases and may impact Nebraska law.
“We look forward to the Supreme Court’s review of this important issue,” said Jennifer Gaughan, Legal Aid’s Chief of Legal Strategy. “These tax sale foreclosure laws harm the elderly, sick, and poor the most, with a disproportionate impact on people of color. Owning property is one of the main ways to accumulate wealth. This process does more than just recover property taxes. It strips low-income homeowners, like Mr. Fair and Ms. Nieveen, of what little wealth they have acquired, and pushes them farther into poverty. These cases illustrate what we see happening across the state.”
“These laws are self-dealing and a shock to the conscience. Refusing to recognize established interests in property as a means to take it spawns distrust. The county took the property without just compensation,” noted Laurie Heer Dale, Legal Aid of Nebraska’s Executive Director.
“Home equity is property protected by the Constitution,” said Christina Martin, senior attorney at Pacific Legal Foundation. “When the government takes more than it is owed in taxes, that’s home equity theft. We are thrilled the Supreme Court will hear the Minnesota case, which we hope will end unconstitutional home equity theft across the country.”
If you are a homeowner and are in need of assistance, the Homeowners Assistance Fund administered by NIFA is available to help. This fund will help pay delinquent real estate property taxes to avoid further legal or tax foreclosure activity. There is up to $40,000 per household available, but the funding is limited. Applications are at: https://haf.nifa.org/
About Legal Aid of Nebraska:
Legal Aid of Nebraska was established in 1963 and is the largest statewide non-profit civil legal aid provider in Nebraska, providing free high-quality services to low-income Nebraskans in all 93 counties. Legal Aid’s mission is “to promote justice, dignity, hope and self-sufficiency through quality civil legal aid for those who have nowhere else to turn.” Legal Aid has offices in Lincoln, Omaha, North Platte, Norfolk, Grand Island, Scottsbluff and Bancroft.