The unconstitutional practice of home equity theft has allowed individuals to be stripped of their property without fair compensation.
An 83-year-old retired engineer in Michigan underpaid his property taxes by $8.41. In response, Oakland County seized his property, auctioned it off to settle the debt, and pocketed nearly $24,500 in excess revenue from the sale.
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 in 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.
Under Michigan law, it was all legal. And hardly uncommon.
After purchasing his house, Rafaeli believed he was paying his property taxes on time and in full, but in 2012 he received notice he had underpaid his 2011 tax bill by $496. The retired man paid the majority of his debt but accidentally made a mistake while working out the interest, meaning his payment was slightly off.
Unaware of his mistake, Rafaeli sent off his cheque, and while it was in the mail even more interest accrued on his property tax. He ended up being short by $8.41 (£6).
As a result, Oakland County seized the 83-year-old’s property and put it up for auction before pocketing $24,215 in profits in 2014. According to the real estate site Zillow, the house sold for $60,000 and is now estimated at $129,507.
Rafaeli, who lost his property and all the equity associated with it, is just one of the thousands of people to be victimized by Michigan’s uniquely aggressive property tax statute.
The law, passed in 1999 in an attempt to accelerate the rehabilitation of abandoned properties, empowers county treasurers to act as debt collectors. In the process, it creates a perverse incentive by allowing treasurers’ offices to retain excess revenue raised by seizing and selling properties with delinquent taxes—even when the amount owed is minuscule, and even when the homes aren’t abandoned or blighted at all.
Rafaeli accidentally underpaid his tax after buying the 1,500-square-foot Southfield home in Michigan, US, in 2011. He paid $60,000 for the property and put additional money into the home with the intention of renting it out to fund his retirement.
Watch the video report below:
Sources: OpposingViews, CBS News
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