Opinion: Government should not be able to take a home as payment for an $8 debt
Oakland County seized and sold my rental home for an $8 tax debt. Now I’m fighting back.
In August 2014, I received the phone call from the property manager I employed to look after the house I owned in Southfield. He told me the county had foreclosed on my property.
I was shocked and angry, as I knew I had paid my property taxes. Soon I would learn that while I had signed up for a piece of the American dream with my investment, I was entering a bureaucratic nightmare — all thanks to Michigan’s Draconian tax forfeiture laws, which I’m now challenging in court.
Here’s what happened: I purchased the Southfield home as a rental property in 2011 to supplement my retirement pension and perhaps a better inheritance for my children. At the time, the economy was still struggling to recover from the financial crisis and subsequent recession. But I was confident the U.S. economy would soon pull through.
I paid $60,000 for the house and more to fix it up. It was a sizable expense, but I was willing to take the risk of investing in Michigan. And it was a lovely home, sitting on a half-acre in a nice, quiet neighborhood. It would be a “win-win” situation, I reasoned, since I would collect rent to improve my retirement income while investing in the local community, and providing tenants with a comfortable, affordable home.
But I had made an error, inadvertently underpaying my 2011 property taxes by $500. Once I learned about the mistake, I paid what I owed and thought that was the end of it. Besides that initial oversight, I paid my taxes on time and in full each year.
Unbeknownst to me, however, the interest on that overdue tax liability kept running while my check was in the mail, which left me with an outstanding tax debt — of $8.41. Based on that piddling sum, Oakland County officials swooped in and foreclosed on my property in 2014. Adding insult to injury, the county swiftly moved to sell the property at auction to a private investor, evicting the tenants who lived in the home, for the grand total of $24,500 — substantially less than its value. The county kept it all. And I was left with nothing, all owing to an overlooked debt of $8.41.
I was horrified to learn that this practice is more common than you would think in Michigan. Homeowners who fail to pay property taxes can have their homes seized and sold off, and they lose all of their equity. Recognizing this as a deep injustice, I sought legal help from Aaron Cox Law Offices, who helped me to begin the fight to end this injustice.
Then, my situation came to the attention of the Pacific Legal Foundation, a legal nonprofit that took on my case at no charge and got the Michigan Supreme Court to hear my case. If I win, my case will help protect the rights of all people in Michigan.
Government should not be able to take an entire home as payment for an $8 debt. And when a county does foreclose on a home to collect a tax debt, it should have to sell it for a fair price and refund the extra profits after collecting the debt, penalties, interest, and costs.
I was fortunate, since I found legal representation to help fight this injustice. Many property owners are not so lucky. They simply don’t have the time, knowledge, or money to confront a government agency that has teams of lawyers and big legal budgets at its disposal. As you can imagine, the people most vulnerable to abuse under this system are seniors like me, working families, the disabled and others who lack substantial resources to combat government abuse.
Former owners who lose their property this way are not the only ones who are harmed. Michigan’s current law hurts the community. In my case, the investor who purchased my lovely Southfield house at auction had difficulty with the title and ended up returning the property to the county, but the county did not return the house to me.
Today, the once-beautiful, well-kept house that had provided a good home for my tenants sits abandoned and dilapidated. What I had hoped would be a “win-win” situation ended up as a loss for everyone — the county included, since no one is even paying taxes on the property anymore.
My great hope is that in fighting back, I will not only achieve justice for myself, but also for others who have been victimized by Michigan’s corrupt tax law. It’s unlikely I’ll ever fully recoup the financial losses I suffered as a result of this event. But if we can protect other working people, families and retirees from suffering a similar fate, I’ll still consider that a moral victory.
Uri Rafaeli is a plaintiff in Rafaeli v. Oakland County. The Michigan Supreme Court hears the case Thursday.