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 issue 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.
WND reported earlier this year a court took the highly unusual move of restoring a case even after it had been rejected all the way to the Supreme Court.
U.S. District Judge Paul Maloney in Michigan wrote of “the potential for inequity” in the case brought by Wayside Church against the county government.
The church charges the county unlawfully has kept $189,250 that belongs to the church.
The Pacific Legal Foundation explained that when Wayside Church fell behind on its 2011 property taxes on a parcel that the church had used as a youth camp, Van Buren County took the youth camp property and sold it for $206,000 to pay the church’s $16,750 in taxes, penalties, interest and fees.
Then, in addition to what was due, the county kept every penny of what it got for the land.
The county also was accused of selling Henderson Hodgens’ childhood farm and home for $47,750 to pay a $5,900 debt. And, according to the complaint, it sold Myron Stahl’s property, where he was building his retirement home, for $68,750 to pay a $25,000 debt.
WND reported when the church’s case first developed a judge took officials in Van Buren County to task with a stunning charge.
“In some legal precincts that sort of behavior is called theft,” wrote Judge Raymond Kethledge in his dissent of a 2-1 decision Feb. 10 in favor of Van Buren County by a three-court panel of the U.S. Court of Appeals for the Sixth Circuit.
Kethledge, according to the ABA Journal, is believed to be on President Trump’s list of potential candidates for future openings on the U.S. Supreme Court. The report said Trump and Kethledge have one thing in common – “blunt opinions.”
The majority opinion determined the district court lacked jurisdiction, and the plaintiffs must pursue their claims in Michigan state court. However, the latest decision reverses that ruling.
The Michigan property was used as a camp for inner-city children by the church, a historically black congregation on the South Side of Chicago.
County officials denied to WND there was any profit, saying instead it was only money in excess of the amount of taxes owed.
Van Buren Treasurer Karen Makay has told WND, “We are not confiscating property.”
She explained the county confiscates property to take ownership, then sells a number of properties at one time.
Kethledge pulled no punches in describing the case.
“At this point one senses we have lost our constitutional bearings,” he charged. “The plaintiffs have asked us to adjudicate a claim arising under the federal Constitution, which is the most important type of claim that we can adjudicate. The claim itself is substantial: that, when a state takes fee simple to property in satisfaction of a tax obligation, the state effects a taking to the extent the property is worth more than the taxes and penalties owed.”