10/17/22 Sixth Circuit Rules Government Cannot Seize $300,000 in Home Equity to Pay $22,000 Tax Debt

10/17/22 Sixth Circuit Rules Government Cannot Seize $300,000 in Home Equity to Pay $22,000 Tax Debt: Contents

Sixth Circuit Rules Government Cannot Seize $300,000 in Home Equity to Pay $22,000 Tax Debt

The US Court of Appeals for the Sixth Circuit recently ruled,  in Hall v. Meisner, that the government cannot seize $300,000 in home equity to pay off a $22,000 property tax delinquency. Such “home equity theft” qualifies as a taking and therefore requires payment of “just compensation” under the Takings Clause of the Fifth Amendment.

The ruling was written by prominent conservative Judge Raymond Kethledge, who is sometimes considered a potential Republican Supreme Court nominee. 

In some key ways, this ruling follows the reasoning of Rafaeli, LLC v. Oakland County, a 2020 decision by the Michigan Supreme Court, which reached a similar conclusion under the Michigan state constitution in a case with facts even more egregious than those of Hall (Oakland County, Michigan had seized the entire value of a $24,500 home in order to pay off a mere $8.41 tax delinquency).

There are two notable differences between the two cases. First, the Sixth Circuit decided the case under the Takings Clause of Fifth Amendment of the federal constitution, not merely a state constitution. Second, the Sixth Circuit makes clear that states cannot avoid takings liability by passing a law redefining “long-established” property interests. The government had argued that this latter consideration differentiated Hall from the state supreme court case.

Judge Kethledge goes on to explain that longstanding principles of the Anglo-American legal tradition hold that foreclosure does not entitle the government to appropriate the entire home equity held by the owners, as opposed to merely the amount needed to pay off the tax delinquency or other obligation at issue.

Click here to read the article:  Sixth Circuit Rules Government Cannot Seize $300,000 in Home Equity to Pay $22,000 Tax Debt (reason.com)

en_USEnglish
Skip to content