Reason reported on a 83-year-old retired engineer in Michigan who had his property seized for underpaying property taxes by $8.41.
Oakland County seized his home, auctioned it off to pay off the debt, and took a cool $24,500 of the excess revenue from the sale.
Under Michigan law, this action was legal.
The man in question, Uri Rafaeli, is one of thousands of people that have fallen prey to Michigan’s property tax statute. This law was passed in 1999 to speed up the rehabilitation of abandoned properties, thus turning county treasurers into debt collectors.
Eric Boehm explains the political implications of this move:
In the process, it creates a perverse incentive by allowing treasurers’ offices to retain excess revenue raised by seizing and selling properties with delinquent taxes—even when the amount owed is miniscule, and even when the homes aren’t abandoned or blighted at all.
Organizations fighting for property owners like Rafaeli claim that this practice is “unconstitutional, inequitable, and unreasonably harsh.” These activists call it “home equity theft”—a process that’s a close relative to the civil asset forfeiture laws that have been used by police departments to similarly deprive innocent Americans of their property without due process.”
“Michigan is currently stealing from people across the state,” declared Christina Martin, an attorney for the Pacific Legal Foundation, a nonprofit law firm that is providing legal counsel to Rafaeli and other homeowners. They have filed a class-action lawsuit which the Michigan Supreme Court will take up in early November.
This whole drama started back in August 2011 when Rafaeli bought a three-bedroom, 1,500-square-foot home in the majority African American community of Southfield, Michigan, a humble suburb slightly north of Detroit. “The investment was good to the state economy, and [at] the same time, it may produce a good rent for my retirement. A ‘win-win’ situation,” claimed Rafaeli.
He lived in neighboring Macomb County during this time period. Now, he no longer lives in Michigan.
On January 6, 2012, the Oakland County Register of Deeds recorded the $60,000 purchase. In June 2012, around six months later, Rafaeli was informed that he underpaid his property taxes by $496. Nevertheless, Rafaeli fulfilled his following property tax payments by paying them on time and in full.
In January 2013, Rafaeli made an attempt to clear up his unpaid tax debt, according to court documents.
However, he made an error in determining how much interest was owed. As a result, he underpaid by $8.41.
A year later, on February 2014, Rafael’s rental property was one of the 11,000 properties that Oakland County auctioned. The property was sold for $24,500 in August 2014, which was much less than Rafaeli paid for the property three years prior.
Rafaeli said, “I believed in the power of the U.S. to withstand the difficulties and I believed in its fairness and dignity in doing business there.”
However, Rafaeli has become pessimistic about this situation.
Martin reminded liberty activists of the political implications of this case.
“The Constitution was written to prevent the government from violating a right that preexists the Constitution,” says Martin. “If this can happen to multimillionaires and to the poor, to the elderly….If this can happen to Mr. Rafaeli, it can happen to anyone.”
Looking at Rafael’s case, should give liberty conservatives some perspective on the importance of local politics. Ignoring it, will only enable further infringements on basic liberties.