Property Rights

County Says Seizing Home Over $8.41 Tax Debt Was OK Because Counties Need Money

"You have a situation where a person owed $8 and lost their house. I mean, how is that equitable?" asked Michigan Supreme Court Justice Richard Bernstein.

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Arguing before the Michigan Supreme Court, attorneys for the county that pocketed nearly $25,000 from forfeiting Uri Rafaeli's property over a $8.41 tax debt argued that it's not really about the property—it's about the money.

That telling moment came in the midst of a back-and-forth between Justice Richard Bernstein and John Bursch, the attorney representing Oakland County. In trying to defend the county's right to seize the full value of Rafaeli's property over a minuscule debt, Bursch had argued that it was impossible for local governments to compensate all homeowners who had been caught in similar circumstances. The price tag, he estimated, would be more than $2 billion statewide.

Rafaeli's situation is awful but hardly unique: Under the terms of a state law passed in 1999, county treasurers in Michigan are allowed to seize properties with unpaid taxes, settle the debt, and keep the remainder for their own budgets. The Pacific Legal Foundation, a nonprofit law firm, is challenging that law, arguing it violates provisions in both the Michigan and U.S. Constitutions.

"A ruling for the plaintiffs will ruin local governments," warned Bursch. "That will come right out of schools, roads, firefighters, and other basic services."

Bernstein wasn't buying it.

"The interpretation you gave was very dramatic: that this is going to end schools, and the counties are going to crumble, and society is just going to implode," said Bernstein, interrupting Bursch. "You have a situation where a person owed $8 and lost their house. I mean, how is that equitable?"

"It may sound unfair on its face," Bursch replied. "But it's also unfair to force those who pay their taxes to subsidize those who don't."

Bernstein was still skeptical. "It was $8," he said. "Couldn't it be a mistake?"

"The counties don't want the property," argued Bursch. "They want the money." Bingo.

There are two different ways to interpret Bursch's argument. What he was probably trying to say is that counties are using the law—and forfeiture proceedings authorized by it—as a punitive measure to compel the payment of taxes.

Later during the same oral arguments, he described the arrangement as pure government paternalism.

"It's the same as when I tell my kids: 'If you don't pick up your stuff, it's mine,'" Bursch argued. "They can't complain when I then take their stuff and claim that I took their equity in that property."

That's a silly analogy for a whole bunch of reasons—homeowners aren't the government's children, most importantly.

Chief Justice Bridget Mary McCormack quickly crushed that line of argumentation by pointing out counties can't dodge takings claims by arguing that at least they respected due process. That would be like cops trying to get away with violating the Fourth Amendment's prohibition against unreasonable searches simply by claiming they were respecting a suspect's First Amendment right to complain about the search.

Beyond the gross paternalism on display, the county's argument still breaks down. Only a few states have property tax forfeiture laws that are as strict or punitive as Michigan, but people in other states still pay their property taxes. And local governments in Michigan have plenty of other means by which to compel the payment of taxes—interest, fees, and penalties are already charged in situations where forfeiture occurs in Michigan. If those measures are not sufficient, they can be increased by statute. But imposing penalties is fundamentally different than taking the full value of a property over unpaid taxes.

Whether he meant to or not, the second way to understand Bursch's comments about the county wanting the money is that he's saying the quiet part loud. As Reason's reporting has shown, counties do seem to want the money. And not just the money they are owned from property taxes, but the excess revenue they have been able to raise by aggressively pursuing home equity forfeitures.

In Oakland County, for example, the special budgetary fund that contains revenue from tax foreclosed properties contained more than $196 million last year, according to the county's most recent comprehensive annual financial report.

The same document details plans to use the DTRF for a number of pet projects, including the construction of a new animal shelter and adoption center. The county also "anticipates the continuation of annual transfers from the DTRF to support General Fund / General Purpose operations in the amount of $3.0 million annually for FY 2019 through FY 2023″—totals that are in line with historical norms, according to the annual report.

That's hundreds of millions of dollars in private equity that have been transferred to the two counties' control—completely legally, under the terms of Act 123.

In neighboring Wayne County, more than $382 million in delinquent tax surpluses have been funneled into the general fund budget since 2012, according to an analysis by Bridge magazine, a Michigan-based nonprofit publication.

This probably isn't the sort of thing that will be the determining factor in the lawsuit against Oakland County—but it does make clear just how much money is at stake here.

"Failure to pay your property taxes doesn't give the government license to take everything from you," says Christina Martin, the attorney with PLF who represented Rafaeli and other landowners in front of the state Supreme Court. "If they could do that, then they could take your car if you pay a parking ticket late."

A ruling in the case is expected in the first half of next year.

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  1. “If they could do that, then they could take your car if you pay a parking ticket late.”

    DON’T GIVE THEM ANY IDEAS.

    1. Yeah, what he said. But he said it earlier.

      1. Humm, I might start using that instead of “Damn you beat me to it.”

    2. Damn good point. I feel they probably aren’t reading Reason stories though

    3. Why wait for non-payment? Just tow the car straight to auction.

      1. That would require efficiency in government. So we’re safe there.

    4. Have you seen “Parking Wars”? They do.

    5. I think when governments operate this way, seizing a house to pay an $8 debt then keeping the additional value of the house, they exceed the threshold for triggering Citizen action using the methods envisioned by the Second Amendment.

      I understand that foreclosure may go forward to recoup an $8 debt. But anything more than that is theft. (And I can’t help but think that going after $8 wasn’t the point in the first place.)

      1. $8 isn’t worth typing up a demand letter.

        Yet they went through with a foreclosure and courthouse sale, even though the guy was trying to pay the bill.

        No… they wanted a hundred grand for themselves, and a hundred grand for their buddy the investor.

    6. Like, this is not new. It’s just that no one will report it because it doesn’t resonate with the sort who can pay a fine plus daily fees plus attorney costs to recover.

      It’s almost as if they practice on the vulnerable until it’s established practice and then they unleash it on those who had resources once the established practice becomes the Way Things Are Done.

      Iron Law. Robespierre. And other shit wot I’m sure only affects other people.

      This will all end well. Stay quiet. Be still. All is well.

    7. Isn’t that what Chicago has been doing for years?

  2. Little boy blue…
    …He needed the money.

    1. Mother Goose…
      ….Yeah I fucked her.

      1. Andrew, what’s the difference between 2 fifths and 3 fifths?

        That’s what I say, teach, what’s the fucking difference?

      2. This guy fucks.

  3. “A ruling for the plaintiffs will ruin local governments,” warned Bursch. “That will come right out of schools, roads, firefighters, and other basic services.”

    You’re breaking my frickin’ heart.

    1. It’s hard not to notice that when it comes time to cut budgets, it’s always the schools, roads, firefighters and ‘basic services’ that are first in line for cuts. It never seems to be the Legislators’ Golf Club that gets dialed back.

      One is reminded of Sowell’s parable of the Ministry of Medicine for Sick Children and Statues of Benedict Arnold.

      1. I remember when the outdoor monuments were closed back in 2013.

        1. but they ran out of money before they could buy enough tape to close off the Benedict Arnold statue, think of the poor children who were scarred!

    2. Oh well, since you put it that way, carry on.

    3. Well then raise taxes on the people getting those services or reduce the services. It’s injust to claim an entire home over a slight accounting mistake; fuck the state of Michigan and particular that county and the attorney trying to defend this shit. Thank God there appears to be at least one reasonable judge.

      1. It’s the Michigan Supreme Court – and so far as I could tell none of the justices seem to be buying it.

        1. You’re committing a lot of hope from a Blue state Supreme Court???

          1. Michigan is not so blue. On a county or precinct map, it’s a sea of red with one smudge of blue in the Detroit-Flint area, and a few blue dots elsewhere. By population, it’s been about 50-50 since the 1960’s – or lately, more like 30-30 and 40% who most likely will hold their nose and vote for one of the major candidates.

            That’s a problem when the ballots include state supreme court justices and the boards running colleges – even when I took a sample ballot and googled these candidates, I still didn’t know much about them besides their (claimed) party affiliation – but that’s little help to me when usually D indicates a moronic and likely corrupt socialist, R a moronic and maybe corrupt semi-socialist or religious fanatic, and L a nut with no hope of winning.

            The state legislature has generally been Republican. Democrat and Republican governors alternate every few 4-year terms: George Romney and Milliken (R) in the 1960’s and 70’s, Blanchard (D) in the 80’s (first elected in the anti-Reagan shift in 1982), Engler (R)
            90’s, Blanchard (D) in the oughts, Snyder (R, and the only one since Milliken that wasn’t a moron) 2011-2019, Whitmer (D) now. Trump got a narrow majority in 2016, but an attempted recount turned up problems with 26 percent of the ballot boxes in Detroit (and then the recount was dropped), so maybe his real margin wasn’t so narrow. The Democrats won heavily in 2018, but a few years of Democrat mis-rule will swing it back.

    4. As it fucking should.

    5. And people here get upset when I suggest it’s a good thing when these kinds of progtards get hurt.

      1. Well, dude, it’s supposed to be normal that humans get upset at other humans getting hurt. I suspect it’s this whole deal where we’ve convinced ourselves that other humans aren’t real humans, and therefore whatever we do to these base savages must be okay because we have the mandate of god and rightness and whatnot, that causes most of humanity’s inefficiencies.

    6. The proper response to this lie, is simply that the local government can raise taxes to raise the revenues. They can start by raising property taxes, sales taxes, and local income taxes.

      It’s one thing to tax residents. It’s another to just take all their assets because they owe the government $10. It’s clearly in violation of the 8th amendment’s prohibition that “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” Boehm failed to show this (at least he says the Pacific Legal Foundation says it’s unconstitutional).

      Let’s pass a law, seizing all the assets of anyone who works for government, that hasn’t paid all their taxes. That would be fair.

  4. That’s a silly analogy for a whole bunch of reasons—homeowners aren’t the government’s children, most importantly.

    BLOOMBERG 2020.

  5. “A ruling for the plaintiffs will ruin local governments,” warned Bursch. “That will come right out of schools, roads, firefighters, and other basic services.”

    If true, this just means that those local governments should be ruined.

    1. If the only way local government can fund itself is through literally confiscatory taxation, then that local government doesn’t deserve to exist.

      1. Actually, it seems like all of Michigan state government and most county and city leaders have proven themselves grossly incompetent. Time to gather them up and have them march due south from Detroit (check the map).

        1. “march due south from Detroit”. Would you let them walk across the Ambassador Bridge, or try to swim the river?

      2. Admit it, you just wanted to use the phrase “confiscatory taxation” to impress Eric

    2. You have to admit it’s refreshing when they admit what they’re doing.

      1. Only if it gets a rolling against them. If they admit it and still get away with it, it’ll be much worse.

    3. So if everyone correctly pays their taxes the county government will collapse?

      1. “We wouldn’t put it exactly that way. If this program were to be cut, critical county resources would be at risk of proceeding unfunded.”

        1. Exactly, how do you “proceed unfunded”? No pay, no play.

  6. Open wide, clingers, here comes some progress headed straight atcha!

  7. This is why property taxes should be unconstitutional. It is the difference between actually owning property, and renting it from the government. Imagine some poor slob like me, works his whole life to pay his mortgage, finally pays it off, and retires. Uh oh, he gets sick, and all his money goes to the doctor. At least he still has his house, right? Nope, not if he can’t afford to pay taxes on it EVERY YEAR UNTIL HE DIES!
    Fuck the government.

    1. It is the difference between actually owning property, and renting it from the government.

      Renting is, in fact, what you do, though, at least legally speaking.

  8. Kinda missing the point of having a county in the first place.

    1. Can you prove to me that counties actually exist?

      1. Come on Eddy, you know the Jooooooosssss are behind all of it.

    2. “Kinda missing the point of having a county in the first place.”

      It’s the jooze, right you fucking bigot?

      1. You define “troll”.

        There will be plenty of opportunity to discuss the behaviour of Jews when it is relevant.

        1. “You define “troll”.”

          And I see your name when looking up “scumbag bigot”, you piece of shit.

        2. I think it’s relevant when you dismiss the extermination of a branch of my family like it didn’t happen, you goddamn piece of shit.

          Not much else to discuss with a Hitlerian such as yourself.

          1. You’re wrong troll.

            1. Oh, really? Well, my genocidal anti Semitic friend, pray tell how am I wrong?

              Is it because of the Joooooosssss?

              1. You brought up Jews on this thread where it has no relevance simply to elicit a reaction as per the definition of “troll”.

                “ In Internet slang, a troll is a person who starts quarrels or upsets people on the Internet to distract and sow discord by posting inflammatory and digressive,[1] extraneous, or off-topic messages in an online community (such as a newsgroup, forum, chat room, or blog) with the intent of provoking readers into displaying emotional responses[2] and normalizing tangential discussion,[3] whether for the troll’s amusement or a specific gain.”

                http://en.m.wikipedia.org/wiki/Internet_troll

                1. I have provided evidence of science and logic.

                  You have demonstrated bigotry.

                  Examples of bigotry in a Sentence
                  “ a deeply ingrained bigotry prevented her from even considering the counterarguments”

                  http://www.merriam-webster.com/dictionary/bigotry

  9. I can give John Bursch an idea for how to finance police and firefighters. If a government lawyer misses a filing deadline by a single day, take all his property and condemn him to penal servitude.

    Maybe this will give Bursch a clue on the relationship between justice and proportionality.

    1. Or maybe the judges can mitigate the loss by auctioning off the tax office and paying Uri’s damages from the proceeds.

  10. “Bursch had argued that it was impossible for local governments to compensate all homeowners who had been caught in similar circumstances. The price tag, he estimated, would be more than $2 billion statewide.”

    So… One crazy idea I had would be this: if you don’t steal money and then spend it on the first place, you won’t go broke when you get caught and have to pay it back.

    This case is an excellent example why government officer immunity is terrible. The taxpayers and the homeowner are both gonna be harmed by these idiot pen pushers who will walk away without serious penalty. Best case, they are embarrassed enough to decide to resign.

    1. There could be penalties. Just not the kind that involve the legal system, which has failed.

    2. That was the horrific moment – the guy is using “look, we have stolen over $2 billion from our citizens already!” as a reason why they should be allowed to keep doing it.

      The mind boggles.

  11. It’s not so much that local governments wouldn’t have the money. It’s that local governments would have to fight for state money with the rest of the interests that want state money. Much easier just to make your own rules, enforce your own rules, collect based on your own rules, and keep the money yourself. Which is, actually, what a bank robber does.

  12. Very important article that brings light to a sad situation that happens all too often across the country. I have seen similar situations in New York although not as egregious as the man in this article who lost his property over a mere tax underpayment of 8 dollars. Tax foreclosures should not be a windfall for tax collectors and it defies common sense that the tax collector can retain all surplus over the amount of taxes due. There should also be a law that requires more notice than merely sending a certified letter to the address on file for the property owner. Perhaps the tax collector should have a licensed process server try and locate the owner and serve the notice on him/her and also publish the foreclosure sale in a local newspaper. Thankfully Michigan has taken steps to correct this abuse, but so many other states have yet to do anything.

    1. There should also be a law that requires more notice than merely sending a certified letter to the address on file for the property owner.

      Is this an increased burden that has fallen on the county land recorder because MERS is now the owner of record for most land that is still under mortgage? Cuz while I don’t doubt the venality of those counties, I would also not be surprised if MERS hasn’t really fixed their own venality that led to the robosigning foreclosures a few years ago.

      If they didn’t really have much interest then in notifying the state who is actually behind payments in their mortgage and legally forecloseable, then I don’t see why they would have much interest now in notifying the state who has paid off their mortgage and is now free-and-clear owner. At minimum, dealing with MERS may involve a lot more cost/complexity for those counties – and bureaucrats don’t do complexity well. And mortgage lenders as an industry also likely benefit from foreclosures on free-and-clear owners cuz it increases the odds that the land gets mortgaged again and back in MERS for securitization.

  13. “…”You have a situation where a person owed $8 and lost their house. I mean, how is that equitable?” asked Michigan Supreme Court Justice Richard Bernstein…”

    How do you expect Detroit to ‘rebuild’ if the government can’t extort money?

    1. This is exactly why Detroit will continue to slide down to the level of Newark, NJ.

      1. Does Newark have whole sections that are abandoned and condemned because the city cannot provide basic services?

  14. Really amazing topic. You put great efforts. Good work

    Kundli Matching

  15. This is exactly why we need our guns. The slow erosion of property rights runs parallel to other rights. This is what totalitarian government looks like. No mention was made of government to be responsible with their budgets. Why is government treated like a parent? Parents are responsible to teach children. Therefore, citizens are in the parent role. Citizens should teach government to stay within their means. Governments’ responsibility is to protect us, not victimize us, like the family dog. Who takes orders from the family dog?

  16. “needed the money”

    – every robber, ever.

  17. While I completely sympathize with the plaintiffs in this case, I must say that their lawyer did them by favors. Her arguments and comportment on the stand were amateurish and unconvincing.

  18. Issue a ruling? The Michigan Supreme Court should exercise its police power and issue warrants for the arrest of the county commissioners, and charge them with theft and fraud and violating the civil rights of the homeowner. Stop messing around.

  19. “It’s the same as when I tell my kids: ‘If you don’t pick up your stuff, it’s mine,’ Bursch argued. ‘They can’t complain when I then take their stuff and claim that I took their equity in that property.'” Is this the kind of retardation a law degree gets you? He bought (I assume) his kids’ toys. They’re already his, so obviously he gets to dictate the terms of its use and storage. The government isn’t (or was never supposed to be) the owner of people’s property, but that’s the obvious assumption he’s making: It’s the government’s to rescind at any time. Failure to keep buying the right to use your own stuff year after year will result in the government taking back something that it never had the right to in the first place.

    1. This is why I have been saying it’s long past time to start dealing with our progtards. They have to go.

    2. Correct. All money (and assets) belong to government, and we are damn lucky they let us keep anything at all.

      1. The money that you get to keep when you file your taxes are called “tax expenditures” by the IRS.

  20. By oversight I neglected my local taxes for several years. By the time I got the bill with penalties it was substantial.

    The good news is that it was not all that painful. I got the supervisor for collection on the phone and we came up with a monthly bill without interest to pay it off.

    So local government is not always terrible. These people in the county obviously are taking advantage. It is well known where I live that the County is rife with corruption.

    Property tax is too high where I live so eventually will move someplace with lower tax rates.

  21. Michigan’s economy has been traveling down the drain for years. They use the typical government response to poor revenue; raise taxes. This killed housing there. Detroit is not a nice place to live, so people move out and property tax revenue drops. Solution? Raise property taxes on the remaining homeowners. So guess what their next move is. I’ve seen this on tollways as well. Not enough people driving on them? Raise the tolls! Geniuses at work.

  22. I’m looking forward to the book this asshole’s kids will write about their scumbag narcissistic father someday.

    -jcr

  23. This guy Bursch is performing the “how to” audition / employment video for a Sanders / Warren administration.

  24. County Says Seizing Home Over $8.41 Tax Debt Was OK Because Counties Need Money . . .

    If the counties need money that bad maybe they should go rob a bank which would net them much more money than they could get from robbing a homeowner.

    Counties would be a lot less interested in doing this if they were required to turn over all recovered funds (in excess of the unpaid debt) to the former property-owner.

  25. The county should be able to come up with a more legally sufficient justification. Something along the lines of: “He didn’t build that.”

  26. Open wide, clingers, here comes some progress headed straight atcha!
    درمان استرس بدون دارو

  27. It’d be interesting to know to whom the county sold a property appraised at $100,000+ for around $24,000, and if they had any connection with county government.

  28. If the counties need the money that bad maybe they should go rob a bank which would net them much more money than they could get from robbing a homeowner.
    Rashifal

  29. 7 or 8 years ago the same thing happened in Washington DC over taxes for a few hundred dollars. The homeowner was a military veteran in his 80’s with early stages of dementia. The government greed has no bounds. They get to hide behind layers of bureaucracy and very difficult for the individual to fight back.

  30. “It may sound unfair on its face,” Bursch replied. “But it’s also unfair to force those who pay their taxes to subsidize those who don’t.”

    This is broken windows insanity. Not only does seizing this individual’s property ultimately hurt taxpayers through funding the bureaucracy necessary to seize someone’s home over an $8 discrepancy, it also hurts the community by evicting law abiding, paying citizens. Hurts everyone except the government. This local govt has clearly gone rogue and needs to be disbanded ASAP.

  31. Is it just me or did 3 or 4 Reverand sockpuppets pop out of the woodwork?

  32. “”That’s a silly analogy for a whole bunch of reasons—homeowners aren’t the government’s children, most importantly.””

    Government disagrees.

    I think the left disagrees too. They want government to pay for things as if government was their parents.

  33. Thanks to Article 5, we can just expel the insane states. We do not have to live with them.

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