A Nebraska man whose house title was seized over a modest property tax debt has finally gotten it back, ending a yearslong legal battle that almost saw him lose his home and all of its value in excess of what he owed the government.
In 2014, Kevin Fair was unable to pay his $588 property tax bill after quitting his job to care for his dying wife, Terry, who had been diagnosed with a debilitating case of multiple sclerosis. The next year, the Scotts Bluff County government quietly sold that debt to a private investor, Continental Resources, which continued to satisfy the Fairs’ property taxes—until 2018, when the company sent the couple a bill for $5,268.
The family would have to pay that total—their tax debt, along with interest and fees—within 90 days, or lose their house. They would also lose all of their equity, even though their home was worth about $55,000 more than what they owed.
That was business as usual in Nebraska, which was one of many states engaging in legalized home equity theft. “People are shocked about how the law actually operates,” Jennifer Gaughan, chief of legal strategy at Legal Aid of Nebraska, told me in 2023. The law was indeed shocking: Local governments were permitted to sell tax debts to investors, without sending correspondence to the debtors. Three years later, as in the Fairs’ case, the investor would mail the property owner the new bill, which, of course, had grown substantially, with 14 percent interest and other fees. If the owner couldn’t pay within 90 days, then the county treasurer would give the title of the house to the investor, who would then take the home, sell it—and keep the change.
“It’s usually elderly people…people who own their homes outright who don’t have a mortgage, and there’s usually some kind of intervening situation,” said Gaughan. “It’s not just poverty. It’s illness, or something happens in their lives….And then they don’t have notice of it. And then [the home] is being taken.”
The Fairs sued, arguing that losing the equity in their house in excess of what they owed violated the 5th Amendment’s Takings Clause, which promises that the government cannot take private property “without just compensation.” The pair lost multiple times, including at the Nebraska Supreme Court.
The U.S. Supreme Court considered the issue in 2023. The plaintiff in that case, an elderly woman named Geraldine Tyler, accrued a $2,300 property tax debt on her condo in Hennepin County, Minnesota, after some neighborhood incidents, including a nearby shooting, prompted her to move to a retirement community. Unable to finance both her rent and her debt—the total bill came to $15,000 with penalties, interest, and fees—the local government seized her condo, sold it for $40,000, and kept the $25,000 profit. The U.S. Court of Appeals for the 8th Circuit ruled that was fine.
The high court’s justices unanimously disagreed. “A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed,” Chief Justice John Roberts wrote. “The taxpayer must render unto Caesar what is Caesar’s, but no more.” Tyler was 94 years old when the decision came down.
With that ruling in mind, Nebraska’s top court reconsidered its previous decision and ruled that Fair would not have to sacrifice the additional equity in excess of his debt. Whether or not he would be able to retain his title, however, remained unclear, until late last month when he came to an amicable agreement with Continental Resources.
Keep reading
Hellbound and Down 
You must be logged in to post a comment.