Washington, D.C.—The American Property Owners Alliance (The Alliance) finds majority of respondents in a May 2023 survey oppose the practice known as home equity theft, which allows state and local governments to keep beyond what they are owed in taxes, interest and penalties when a property owner falls behind on their property taxes and enters foreclosure—no matter how small the debt.

Property ownership is one of the most significant ways to build equity in America, but in Alabama, Arizona, Colorado, Illinois, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon, South Dakota and Washington, D.C., the practice of home equity theft remains legal and puts homeowner’s equity at risk. What’s more, in Alaska, California, Idaho, Montana, Nevada, Ohio, Rhode Island, Texas and Wisconsin, loopholes exist allowing this practice in certain instances.

The Alliance opposes home equity theft in all circumstances and, in March, filed an amicus brief with the U.S. Supreme Court in support of the petitioner in Tyler v. Hennepin County, a case examining the practice in Minnesota. On May 25, the Court ruled 9-0 in favor of 94-year-old Geraldine Tyler who lost her home and $40,000 in equity due to what was originally a $15,000 debt. The Court’s unanimous decision is based on Hennepin County’s unconstitutional retaining of excess value following a foreclosure and a long-standing principle that the government cannot take more from a taxpayer than what they owe.

While this is a win for property rights and will help property owners challenge this practice armed with legal precedent, home equity theft is still on the books in 12 states and D.C.

“Those states where home equity theft is still in effect must pass legislation that will protect the equity of property owners, particularly senior citizens and other members of the community who may be more vulnerable and facing foreclosure, and close all legal loopholes allowing the government to take more than what’s owed in property taxes,” said Colin Allen, The Alliance’s Executive Director.

Consumers agree—it’s time for action.

A survey was conducted by The Alliance from May 10-16, 2023, and has a margin of error of +/-3.1%. While nearly equal numbers of respondents in each jurisdiction where home equity theft is legal were surveyed, the findings from the survey are weighted to represent the actual population of each jurisdiction relative to the others. The survey found:

• 56% of respondents had never heard of the term “home equity theft,” and 54% of respondents were unaware that this practice legally exists where they live.
• 62% of respondents describe the policy of home equity theft as unethical.
• 77% of respondents agree that state law should be changed to end the practice of home equity theft, so that going forward, only the amount owed in property taxes, interest and penalties—and nothing more—could be collected by the government or private investor.
• 74% of respondents find it unfair that under the law where they live, when the government or a private investor takes a piece of property to get the unpaid property tax dollars owed to it, they are allowed to keep not just the amount owed, but the full equity value of the home.
• 60% of respondents support a prohibition on private debt collectors profiting from seizing then selling homes where very small amounts of property tax are due.

For more information on where home equity theft occurs and how to take action to end it, visit The Alliance’s website.

CONTACT
Amber Hord
apoamedia@propertyownersalliance.org