Home Equity Theft: Help End This Unethical Practice

Home Equity Theft: Help End This Unethical Practice

In the 12 states and Washington D.C. where home equity theft is legal, the government can take more than what it is owed in property taxes in the instance of a foreclosure. In fact, from 2014 to 2022, 8,950 homes and more than $860 million in savings were lost to home equity theft. The American Property Owners Alliance opposes this unjust practice and is urging state legislators to act now to end home equity theft—we need your help.

What is Home Equity Theft?

When an individual falls behind on their property taxes, no matter how small the debt, home equity theft allows state and local governments to seize the property and keep the full sale amount, beyond what they are owed in taxes, interest and penalties. This practice particularly hurts elderly homeowners, many of whom live on a fixed income, stripping them of their home and the wealth they have built over a lifetime.

How Can We End This Practice?

Pending before the Supreme Court right now is Tyler v. Hennepin County, a home equity theft case in which the government seized 94-year-old Geraldine Tyler’s property, sold it for $40,000, paid off her accumulated debt of $12,700 and kept the remaining equity, leaving Tyler with nothing. Ahead of the hearing, The Alliance and the National Association of REALTORS® filed an amicus brief with the Supreme Court opposing home equity theft and urging the Court to recognize its direct threat on Tyler and many other Americans.

Even if the Court rules in favor of Tyler, it will not close all loopholes that allow home equity theft, leaving many property owners vulnerable to this practice. State legislators should act now to craft legislation that ends all forms of home equity theft in their state, effectively protecting property owners and preventing the government from taking more than what it is owed. Together, we can abolish home equity theft everywhere it is permitted.

Join The Effort to End Home Equity Theft

It is time to end home equity theft in all circumstances. The Alliance is a non-partisan, nonprofit organization that works to improve property owner protections and this is one of our top priorities. Sign up to get involved in our efforts.

Learn About Your State’s Stance

See how property tax foreclosure laws allow the government to take homeowners’ equity, beyond what they owe, in the 13 jurisdictions where home equity theft is legal. Select a state from the menu below to learn more from our partners at Pacific Legal Foundation.

Alabama

If an Alabama homeowner does not pay back their tax lien within three years, no matter how small, the government or purchaser of the lien keeps all proceeds from the sale beyond what is owed. Homeowners caught up in this process lose, on average, 99% of their equity. Learn more.

Arizona

If an Arizona homeowner underpays their property taxes, the county will place a lien on the property and auction it to private investors who reserve the right to collect property taxes. If the homeowner can’t pay the debt and fees the investor can take the entire home, no matter how small the debt. Homeowners caught up in this process lose, on average, 99% of their equity. Learn more.

Colorado

If a Colorado homeowner does not pay a tax lien within three years, the lienholder is entitled to take full title to the property and retain any profits from the sale. Colorado homeowners have lost a total of $52 million or more in equity due to this practice. Learn more.

District of Columbia

The District of Columbia permits home equity theft. Washington, D.C. sells tax liens to private investors, who can later file a foreclosure action and take title of a property, keeping all equity beyond what is owed. Learn more.

Illinois

Illinois counties sell tax liens to private investors, who can later file a foreclosure action and take title of the property, keeping all equity. Illinois homeowners have lost a total of $397 million due to this practice. Learn more.

Maine

Cities and towns in Maine place tax liens on delinquent properties which automatically foreclose after 18 months, giving the full title to the municipality. Maine homeowners have lost at least $4 million in equity due to this practice. Learn more.

Massachusetts

Massachusetts cities and towns can sell or keep tax liens on properties. The lienholder may file for foreclosure after 6 months, receive the deed to the property and keep any profits from the sale. Homeowners caught up in this process lose, on average, 82% of their equity. Learn more.

Minnesota

Minnesota permits home equity theft. Counties impose tax liens on properties and the county auditor forecloses liens after a three-year period, giving title to the state. Homeowners caught up in this process lose, on average, 90% of their equity. Learn more.

Nebraska

Nebraska permits home equity theft. Counties sell tax liens on properties to investors who can later apply for a deed and full title of the property and keep all profits from the sale. For the 300 homes in Pacific Legal’s dataset, homeowners lost a total of $17 million. Learn more.

New Jersey

New Jersey permits home equity theft. Cities and towns sell tax liens on properties. The purchaser can later file a foreclosure lawsuit and acquire the profits. For the 650 homes in Pacific Legal’s dataset, homeowners lost a total of $115 million in equity. Learn more.

New York

New York permits home equity theft. Taxing jurisdictions place tax liens on properties. After a certain period, they may foreclose, take the title and keep or sell the property, acquiring any profits. For the 494 homes in Pacific Legal’s dataset, homeowners lost a total of $52 million. Learn more.

Oregon

Oregon permits home equity theft. Counties place tax liens on properties and may seek judicial foreclosure after a certain period of nonpayment. Homeowners caught up in this process lose, on average, 93% of their equity. Learn more.

South Dakota

South Dakota permits home equity theft. Counties may sell or keep tax liens on properties. After a lienholder applies for a tax deed, they receive absolute title. Homeowners caught up in this process lose, on average, 92% of their equity. Learn more.