Court Strikes Down Government Scheme To Steal And Pocket People’s Home Equity

A court has struck down one state government’s “home equity theft” scheme, in which homes are seized and sold to pay back taxes, with the government pocketing the home’s entire equity after overdue taxes are paid.

The Nebraska Supreme Court “ruled in favor of Nebraska homeowners who were victims of legalized home equity theft — an unconstitutional scheme whereby the government takes more than what it is owed to satisfy property tax debts,” reports the Pacific Legal Foundation, who represented two Nebraska homeowners whose house and around $60,000 in home equity were seized by government officials over a tax bill of less than $6,000.

“We are thrilled that after years of litigation, Nebraska finally recognizes Kevin Fair’s and Sandra Nieveen’s right to their hard-earned equity,” said Christina Martin, senior attorney at Pacific Legal Foundation. “The Nebraska Supreme Court held that home equity is protected by the Constitution and that the government cannot take more than what it is owed. This is a great outcome for our clients and all homeowners in the state.” 

According to the PLF, “in 2013, after Kevin Fair’s late wife was diagnosed with multiple sclerosis, he quit his job to care for her at their Scottsbluff, Nebraska, home. But shortly after, Kevin fell behind on his property taxes and the County sold a tax lien for the unpaid taxes to Continental Resources, a private investor.”

“The County later issued a deed to the investor for Kevin’s home and all of the equity he had in it, which was worth around $60,000, even though he owed only $5,268 in back taxes.”

The Nebraska ruling comes after the PLF secured a United States Supreme Court victory against home equity theft.

“With help from Legal Aid of Nebraska, Kevin and Sandra sued in state court to have Nebraska’s home equity theft laws declared unconstitutional. Unfortunately, they lost their claims at the Nebraska Supreme Court. Shortly after, with the help of Pacific Legal Foundation, both asked the U.S. Supreme Court to end home equity theft in Nebraska,” the PLF reports.

“Last May, the United States Supreme Court ruled in another PLF case — Tyler v. Hennepin County — that if the government takes more than what is owed to satisfy a property tax debt, it violates the Fifth Amendment’s Takings Clause. After the Supreme Court decided Tyler, it granted Kevin’s and Sandra’s petitions and sent their cases back to the Nebraska Supreme Court to reconsider their claims in light of Tyler,” PLF notes.

“In view of the Supreme Court’s unanimous ruling, the Nebraska Supreme Court reevaluated Kevin’s and Sandra’s claims and ruled that they must be paid for the excess equity that remained after their property tax debt was satisfied. The Court sent the cases back to the trial court to determine how much the homes are worth and thus how much compensation Kevin and Sandra are owed,” PLF adds.

“Today’s decision also sends a signal to other states that have not yet complied with the U.S. Supreme Court ruling in Tyler that property owners’ rights must be protected,” PLF concludes.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.