Property Rights

A Nebraska County Took His $25,000 Property To Settle a $986 Tax Debt. Now the U.S. Supreme Court Could Get Involved.

Walter Barnette didn't know that his own land had been sold out from under him until it had already happened.

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Walter Barnette knew he owed property taxes to the Nebraska county where he lived, but he didn't know that his own land had been sold out from under him until it had already happened.

Under Nebraska state law, counties are allowed to seize properties with delinquent taxes and turn those properties over to private investors—and as Barnette learned the hard way in 2013, it can happen without the current property owner even being notified. But after the Nebraska Supreme Court upheld the seizure and selling of Barnette's land without his knowledge, attorneys from the Pacific Legal Foundation, a pro-market law firm, are petitioning the U.S. Supreme Court to review the practice.

What happened to Barnette seems like it could happen to anyone. He'd bought an acre of land in Bellevue, Nebraska, in 2002 but fell behind on his tax payments during the Great Recession. He owed $986 in back taxes by 2013—plus a few hundred dollars in fees, interest, and penalties—when Sarpy County offered Barnette's land to a private investor who offered to pay off the debt.

Under state law, the investor, Pontian Land Holdings LLC, was required to notify Barnette of the potential sale before it could take possession of his title by sending a letter via certified mail. But the letter was never delivered—it was, according to court documents, returned to Pontian three times as unclaimed—and the state does not require any additional follow-up.

Having met the incredibly limited notification requirements under state law, Pontian was able to obtain a new deed for the property, which was assessed for about $25,000. Barnette was left with nothing.

"You would think that the government would have to ensure that you get a fair notice," says Christina Martin, the Pacific Legal Foundation attorney who filed the cert petition asking the U.S. Supreme Court to review the case. "They didn't even have to put a stamp on that same letter and send it back in the regular mail so he might have seen it."

The entire process is bizarre and seems ripe for cronyism. Unfortunately, it's not unique to Nebraska. There are at least a dozen states where counties are empowered to seize and sell private property to settle tax debts, even when the property is far more valuable than the taxes owed. The specifics of this so-called home equity forfeiture process can differ from place to place, but the end result is usually the same: property owners losing far more than what they owe to their local governments.

What happened to Barnette has some infuriating similarities to a case of home equity forfeiture that I wrote about last year for ReasonIn that case, Cass County, Michigan, seized a multi-million-dollar lakefront home from Sergei Antipov when the property (which was still under construction) fell into tax delinquency. County officials sent certified letters to the home on multiple occasions before seizing the land, but no one was living there to receive them and officials did not take any additional steps to notify Antipov.

They hardly had an incentive to do so. In a subsequent lawsuit challenging the forfeiture, it was revealed that the county treasurer and other county employees exchanged emails planning future backyard barbeques at the property while the forfeiture proceeding was taking place. When Antipov eventually realized what had happened, he offered to pay the back taxes immediately. The county refused to accept his check, taking the property instead.

Part of the problem in all these cases, Martin says, is that some states view forfeiture action differently than legal action taken against a person. In other words, if a county is going to sue you for some reason, it would have to exhaust every available measure to serve you that lawsuit. But in some states, the government can simply send a letter and call it a day.

"It's not fair," says Martin. She compares it to what might happen when someone fails to pay a utility bill or misses a payment for their internet service.

"When you fall behind on those types of debts, you'll get phone calls, emails, text messages," she says, "but in Nebraska, apparently, all they have to do is try to send a single letter via certified mail."

NEXT: SCOTUS Contender James Ho Combines Respect for Free Speech and Gun Rights With a Troubling Deference to Cops

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  1. Until Ruth bater cancer cunt dies the Supreme Court will continue to rule that private property doesn’t exist and the government owns it all and allows people to be on land at the govement discretion.

    1. Tell us how you really feel. Seriously, don’t hold back.

      1. I feel that if RBCC and John Robert’s ever screw it will unleash your cage and we will have to fight a giant stay Puff marshmallow man

        1. And that’s why you don’t cross the streams.

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        2. I am sorry but RBG is no Sigourney Weaver, especially 1980s era SigournyWeaver. And Rick Moranis seems like a fairly nice and honest guy compared to Roberts. I have to call a penalty on your analogy for this reason.
          Now get away from her you bitch.

          1. At least I made you picture it. And in the end that’s the greatest trolling of all

            1. And now when Mrs SM76 is feeling frisky and I can’t respond, I can blame you. Much rather be picturing Weaver in that red dress.

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    5. Gee whiz, Art. This is a real person you treat so shabbily. As a retired lawyer, I disagree with Ginsberg’s approach to ConLaw, but I wish her good health as a fellow human being.

      1. as a fellow human being

        There’s your error, and why you continue to be the victim of her species (homo sapiens politicus).

        Let’s be clear: the BlackRobes don’t have the same mawkish sentimental nonsense towards We the Livestock.

        Sure, from time to time we get scraps from Massah’s table, much as someone would give their meal scraps to their barnyard chickens: viz., only when it doesn’t change anything that matters to Massah (e.g., Roe v Wade; Loving v Virginia).

        If it matters to Massah, Massah wins (e.g., South v Maryland; Korematsu; Dred Scott; Hamdi v Rumsfeld).

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  2. We all understand the libertarian position on the existence of property taxes. That said, foreclosure sales can happen over other unpaid debts as well, including debts to private parties. It is not good if a loophole exists whereby a person refuses to pay his debts and refuses to take notification of foreclosure, thus postponing sale (and payment) indefinitely.

    Owners can and do disappear without ever making themselves available to deal with issues with a property. There has to be some recourse. At the end of the day, this guy had unpaid debts.

    Again, I already agreed that property taxes shouldn’t exist. But making it impossible to collect on unpaid debts is a terrible way to solve the problem.

    1. There’s an enormous gulf between “We can seize a $25,000 property from you to settle a $1,000 dollar debt, and we don’t have to make any real effort to notify you it’s happening or compensate you for the difference.” and “It’s impossible to collect on unpaid debts.”
      I think perhaps we’re erring far to the wrong side here, and it’s strange to see anyone playing the contrarian.

      1. They made a real effort to notify him. Certified mail, three times? That’s about as real as it gets. Don’t you respect your almighty state’s postal service?

        Try paying your mortgage until your debt is down to $1000 and then not paying anymore. See if it goes any differently.

      2. I think perhaps we’re erring far to the wrong side here,

        These are the rules we all know and play by. It means that if you own property, you need to be vigilant. I check my tax records several times a year just to be sure; it’s all online now.

        Courts should not meddle in this an create exemptions. We can talk about changing the rules legislatively; what changes do you suggest?

        1. No taxes because taxation is robbery?

      3. Maybe something in the middle, like suspending water, sewer, garbage service could be an incentive to get current on property taxes.

        1. So you want gov between you and the utilities you’ve paid for? I think you’re lost. Try https://www.thesocialistmag.org/

    2. If this were an eminent domain case, they’d have to pay fair market value for the land.

      Why is this any different? If they’d paid him $25,000 and deducted the $1,000, then it would be a fundamentally different issue.

      As it is, he owed $1,000 and they took $25,000.

      1. Eminent domain is a whole different matter because the owner has done nothing wrong to merit the seizure of his property.

        Seizing loan collateral, on the other hand, is common for all manner of debts, and property taxes are treated as the equivalent of mortgages for debt purposes. Again, I oppose property taxes, but I don’t think we help the situation by breaking the foreclosure process.

        1. Except this wasn’t a mortgage foreclosure. In fact, if he did have a mortgage on the property he still owes it, since the county seized the property, not the bank

          But really the same logic applies. If he still owed 1000 dollars on a mortgage, and they took his 25,000 property they are still seizing 24,000 dollars that they have no right to.

          As Bubba said, if they sold his property, deducted what was owed (and a reasonable administration fee) and cut him a check for the remainder it would be a fundamentally different issue

      2. Yeah, it’s an unconstitutional taking regardless of whether some hillbilly state, county, or municipal law says otherwise. That’s the real problem, laws are passed by negligent and/or criminal idiots every day that violate our constitutional rights and are then vigorously enforced in violation of same, but it’s the burden of the individual to pursue an often impossibly complicated and expensive process to remedy the wrongs created by them.

        Some legislative bodies knowingly pass unconstitutional civil and criminal laws relying on the fact that the average person doesn’t have the wherewithal of time, expertise, and money to obtain relief from their fraud, often after previous laws imposing similar abuses had already been challenged and found to be unconstitutional. That’s why no person should be subject to a law that hasn’t been judicially vetted for constitutionality. There are too many ignorant, improperly motivated people in government that are willing to create and conveniently benefit from these quiet loopholes to allow same to have the same force of law as those laws that have survived multiple constitutional challenges and found to be consistent with the fair administration of government power. We actually need an additional venue within the judiciary to certify new law before it can be enforced and hold legislators responsible when their ignorance and/or avarice produces such obvious fundamental violations of fairness. Granted, many are of a fine line nature that aren’t immediately obvious as violations of fundamental decency but many aren’t and it doesn’t take a supreme court justice to figure out that many of these property confiscation laws are just plain larceny empowered under the color of authority by people ethically unfit to create any kind of law. The taking of money and property under some of the drug forfeiture laws that benefit law enforcement directly are some of the most obvious examples of these kinds of government manufactured abuses. Back when government functioned more as a service to the People, the problem wasn’t as bad but now that government is overrun with for-profit criminal trash that are outright predators of the People, failing to stop their avarice will eventually make all of conventional government untenable as a means of discharging the People’s collective business. It’s what our forefathers warned us of and it’s happening right in front of our eyes and it will rapidly result in the formal addition of the U.S. to history’s long list of failed democracies. It’s what happens when government is allowed to become so large and powerful that it comes to regard itself as a priority over the welfare of the People it was originally created to serve.

        1. Exactly! ALL laws should be considered unconstitutional when challenged and the burden should be in government to prove they are constitutional.

    3. I see that all the time. In Colorado, there were all kinds of shitbirds buying condos without payment of the HOA maintenance dues (some of those dues include energy, insurance and taxes). Nowadays, most associations state in the bylaws that HOA will start seizure proceedings within 2 months time. The responsibility of address change is on the condo purchaser, not the HOA.

      Agree on the property taxes.

      1. Does anyone who reads Reason not live in Colorado?

          1. NM. Where in MT? I got a pair of aunts and uncles up by Great Falls.

            1. About 20 miles from North Dakota and 50 miles from Saskatchewan.

          2. Montana might be my next stop if/when the loonies succeed in making AZ too much like the hell hole i left (NJ)

            don’t worry, i won’t bring any big govt voting habits with me

        1. I live in SoCal.
          (But I want to move back to Colorado)

        2. WA here.

        3. Maryland – The Soviet Socialist Republic of Montgomery County. Your sympathy is duly noted and appreciated

        4. Oklahoma. Civilized thought occurs surprisingly in seemingly the least likely places sometimes.

    4. You make a good point. Thanks for changing my perspective on this a bit.

    5. Agreed on all accounts. Property taxes, estate taxes and many others are another form of double, triple, etc taxation. But I seriously have little sympathy for either of the people in this article.

      The man knows he owns property and knows that he owes taxes on it. The ability to go to where you can’t be found or refuse to pick up/sign for certified mail shouldn’t place a higher burden on the collector OR excuse one’s self from due process.

      Now the second guy is slightly more complicated, but my sympathy is limited. Again, he knows he owes taxes, and apparently has the money because he tried to pay it as soon as he found out his stuff was getting seized. I still think the guy should have been allowed to redeem his property by paying the taxes and costs of collection, but he’s a freeloader that got caught with his pants down. Sometimes it should suck to be a jackass.

      1. Agree that working the system shouldn’t be rewarded but what about the person who wakes up from an extended coma following a car wreck only to discover that some worthless bureaucrat at the country clerk’s office now owns and lives in his home. Obligations owed to government can rightfully accrue interest on the unpaid balance and thus be allowed to continue unpaid until that balance grows to large to likely be satisfied by the proceeds of a public auction. Few would argue that it would be unfair for the landowner to be forced to pay that accrued debt to prevent his property from being liquidated and it would allow owners time to recover from unexpected financial setbacks. The interest rates could be set at a level that would make it unprofitable to play the system so as to avoid abuses. That would extend the time to foreclosure by years instead of weeks or months to allow for lapses in communication or oversight that can work havoc on the unsuspecting. Some people aren’t even aware they own property from inheritance or gift and might never know that their property was sold out from under them before they even knew they owned it. Unethical government operatives should never be allowed to benefit from such common events that occur through no fault of the owner.

    6. I don’t think the alternatives are “take everything and keep the profits with little to no notice” and “never collect tax debts”.

      There’s probably some room in the middle of those two for something a little more equitable.

      The Michigan laws are worse – the state gets to keep anything in excess of the owed taxes – so they really want to take your property.

      In this case it is simply unfair and is catnip for corrupt officials and businessmen. Paying off a few hundred or even thousand in debt gains title to property worth tens or hundreds of thousands. How could that possibly lead to problems?

    7. Eh, no.

      It’s not like the property is going anywhere, and any sale would have to be listed with the registrar. “Impossible to collect” is a bit of hyperbole as the state can either take possession upon death or take their cut upon sale. There is also a not so small matter of due process as any claim of debit (or ownership) may be in dispute. I see no reason why deference should be given to a claimant, especially in lieu of a court proceeding and judgement. You are well within your rights to refuse anything in the mail (as the state uses this as a basis for sting operations. The state doesn’t get to play both sides).

      Nevermind the idea that someone is entitled to a million dollar property over a 50 cent debit. This is a gross malfeasance beyond any unpaid debit.

  3. Wonder if the county employees who fucked with the Russian millionaire are still on this side of the dirt.

    1. Well, it did say lakefront, right? So maybe they are technically on this side, just a bit damp.

      1. Or if that Russian is involved in construction, maybe in the foundation of a new building somewhere.

  4. Walter Barnette didn’t know that his own land had been sold out from under him until it had already happened.

    Has Walter Barnette figured out it wasn’t his land in the first place? If you’re only allowed to stay there as long as you pay the rent, it should be obvious who really owns the land.

    1. If you’re only allowed to stay there as long as you pay the rent, it should be obvious who really owns the land.

      QFT.

  5. There is a time and place for government forfeiture, but it should not be the first resort. The government should first have attempt to garnish wages capped at a certain percentage of income. If the property owner is not earning income, then they should have to file an intent to seize the property no less than 6 months before a sheriffs sale takes place.

    And, the property owner should have the absolute right up to the final transfer of deed to step in and make payment to end the action.

  6. This is reason mag. You are likely getting a very shaded version of this story. I expect little honestly from these people.

    1. Actually, the facts seem to be described pretty well. He owed back taxes, was notified, and eventually the property was sold to settle the debt. There are many miscarriages of justice but this isn’t one of them.

      Now, I’d be happy if we wanted to discuss abolishing property taxes altogether. But as long as we have them, everybody should play by the same rules, which means paying on time and being reachable.

  7. https://www.marinij.com/2020/09/09/mill-valley-introduces-overseer-of-social-equity-panel/

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    She added that as a libertarian she does not support Trump and her plan was to vote for U.S. Rep. Justin Amash.

  8. The supreme court can find all kinds of rights in the Constitution except the ones clearly stated. I wouldn’t trust any of the lawyers on SCOTUS, even the “conservatives” who somehow found interstate sales tax constitutional.

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  10. What happened to Barnette seems like it could happen to anyone.

    No, it couldn’t. Lots of people pay their property tax on time and verify that it is paid.

    Under state law, the investor, Pontian Land Holdings LLC, was required to notify Barnette of the potential sale before it could take possession of his title by sending a letter via certified mail. But the letter was never delivered—it was, according to court documents, returned to Pontian three times as unclaimed—and the state does not require any additional follow-up.

    Nor should it. As a property owner, you need to ensure that others can get in touch with you at the address listed on the title.

    1. I think it is deeply weird that the onus for notifying the landowner that the property is being foreclosed is on the investor. He’s about to get $25k worth of land for let’s say $1500, unless the owner pays his taxes. How hard is he going to try to notify the owner that this is about to occur?

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  12. You make a good point. Thanks for changing my perspective on this a bit.

  13. Most states have a “right of redemption” period after the sale of seized property. Usually around 6 months. You can pay the amount the property sold for plus some interest and the value of any improvements and get the property back. I purchase tax foreclosed lots all the time, the trick is making improvements to the property immediately so the previous owner is less likely to redeem.

  14. I wouldn’t trust any of the lawyers on SCOTUS..

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  16. Should there be a tax on property? No.
    But there is, so pay them and make sure people can reach you.

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