Local Issues

SCOTUS Rules Home Equity Theft Out, Homeowners Rights In

Two weeks ago and a month earlier than expected, the US Supreme Court released its decision in Tyler v Hennepin County. The justices unanimously sided with 94-year-old Geraldine Tyler, ruling that the county had acted unconstitutionally when it kept the excess profit from the sale of Ms. Tyler’s home, which was confiscated and sold due to her tax debt.

As explained in a previous ALEC blog post, this practice of keeping remaining profit when a home is sold to satisfy delinquent property taxes is known as home equity theft. And thanks to the Tyler decision, home equity theft is now unconstitutional.

For the states that now need to reform their foreclosure processes, ALEC’s Statement of Principles on Ending Home Equity Theft offers some guidance. It recommends that “when a foreclosed property is sold, it should be advertised and sold online in a manner to retrieve a dollar amount as close to fair market value as possible.” This helps to ensure the local or county government can recoup all the outstanding tax debt. Just as importantly, this also helps the displaced homeowners to recover more quickly by receiving back a larger portion of the equity they invested in their home. For more reform suggestions, states can also use this resource.

As Chief Justice John Roberts noted in the Tyler decision, “the taxpayer must render unto Caesar what is Caesar’s, but no more.” It serves as a good reminder that government should exist to serve We the People and not the other way around.

In Depth: Local Issues

While all eyes look to Washington and the state capitals for answers, often times the government closest to home can come up with the best solutions. Local government is a key thread in the fabric of American government, fostering an approach to problem solving that puts communities first. In states…

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