UPDATE: In July 2020, a ruling from the Michigan Supreme Court effectively ended the government from foreclosing on private property for unpaid property taxes, and keeping all the proceeds. The ruling is considered an important step in ending Home Equity Theft nationwide. More on this here: https://pacificlegal.org/in-13-states-its-legal-for-governments-to-steal-your-home-equity/
Uri Rafaeli bought his home in Southfield, 15 miles north of Detroit, with the hope that the rental income generated from the property would fund his retirement for the long run. In 2014, however, the local county treasurer foreclosed on Rafaeli’s home after he failed to pay $8.41 on his property tax bill.
The treasurer quickly sold the home and pocketed the proceeds.
Christina Martin, an attorney with the legal nonprofit Pacific Legal Foundation, is representing Rafaeli in a case filed with the state’s supreme court.
"It seems pretty outrageous to take an entire home from someone for this. I'm optimistic that we're going to get a good decision from the justices," Martin said.
After he bought the house in 2011 for $60,000, Rafaeli underpaid the property tax balance that year, and tried to remedy the situation two years later. However, he miscalculated the accrued interest, falling short with $8.41.
In February 2014, the Oakland County Treasurer’s Office foreclosed on his house and auctioned it for $24,500.
The attorneys representing the county stated that Rafaeli had been sent several pending foreclosure notices in advance.
However, Martin stated that Rafaeli’s case was not the only one of its kind. She highlighted Andre Ohanessian’s case, another client she is representing.
In legal documents filed in April, the county’s attorneys stated: "It is undisputed that [Rafaeli and Ohanessian] failed to fully pay their property-tax obligations. It is also undisputed that Oakland County provided constitutionally adequate notice of the delinquencies."
They added that the court case exists only because Rafaeli and Ohanessian "chose not to pay their taxes. ... Any harshness that results from losing excess equity is the natural consequence of [Rafaeli and Ohanessian]'s own actions."
After they lost their Oakland County properties, Rafaeli and Ohanessian sued the county in 2015, and lost. Pacific Legal Foundation took Rafaeli's case in 2017, and began pushing Michigan Supreme Court to reexamine the situation.
The court finally agreed to reopen the case, and opening arguments were heard. The lawyers for Oakland County produced the supposed copies of the foreclosure notices that were sent to Rafaeli and Ohanessian.
Martin responded, "All the notices in the world still doesn't make it OK for the government to steal from you."
"The end game is basically getting compensation for both clients. And we're trying to put a stop to home equity theft all across the nation, either through legislative change or we want to sue," she said.
Sources: CBS News