If your property was foreclosed on for unpaid real estate taxes, you have probably (but not definitely) had all of the equity in your home taken from you. Simply put, local governments need their local taxes to be paid to balance their budgets and pave roads, change street lights, keep schools open, etc. When people don’t pay their real estate or water/sewer taxes, this messes up the local budget. Depending on where you live, your local governments fix that by either taking your house and selling it (but not giving you what was left over after they got paid) or selling off your debt to an investor who then sells it (but not giving you what was left over after they got paid). This is a violation of the Takings Clause and Excessive Fines Clause of the US Constitution. The only problem is that there is no federal law preventing it, and the U.S. Supreme Court has not yet taken up a case preventing it.
Pacific Legal Foundation has been at the forefront of fighting what is known as equity theft. They have changed the law in a number of States and have been attempting to get a test case to the U.S. Supreme Court. They recently issued a report on equity theft which is available here: https://homeequitytheft.org.
New Jersey and New York are two of 12 states in the country that allow a homeowner’s equity to be stolen from them. In NJ, when you don’t pay your taxes, that debt is usually auctioned off to bidders who will pay off the debt and get to charge interest on it up to 18%. They then get a lien on the property. After two years, if that debt is not paid, there is a strict foreclosure process and the bidder simply becomes the owner of the house. Of course, there are exceptions, but it also means that an unpaid $200 water bill could result in you losing a home that you have lived in free and clear for 30 years. Click here to see the report on New Jersey.
New York is a little different. It allows counties to just take the property if taxes are owed, then sell it and keep all of the money. Click here to see the report on New York.
If you have lost your property due to a tax foreclosure in New York, New Jersey, or any of the 12 states listed on the Pacific Legal Foundation’s Website, please call them for further information.
* This post is for educational purposes and should not be interpreted as legal advice.
Christopher T. Campbell is an experienced New Jersey attorney focused on assisting homeowners with asset and surplus fund recovery. If you have questions regarding asset recovery, a foreclosure, or a sheriff sale, we encourage you to contact us today.