Despite Supreme Court Ruling, States Are Still Confiscating People’s Homes

Authored by Michael Clements via The Epoch Times (emphasis ours),

Horses taught Christine Searle the importance of being fair. Intelligent and innately honest creatures, horses know deceit when they see it. She wishes they could teach that principle to the state of Arizona.

The 70-year-old horse trainer and Arizona native is on the verge of losing her life’s savings over an unpaid $1,607.68 property tax bill.

“I owed them the money. And that’s what they should get—the money I owe them,” Ms. Searle told The Epoch Times.

“I don’t think that they should have the right to take all of it.”

Arizona is one of almost a dozen states that allow creditors to keep all the proceeds from sales of homes foreclosed due to unpaid taxes—known as tax lien sales, according to the Pacific Legal Foundation (PLF).

A 2022 U.S. Supreme Court case out of Minnesota offers some hope to property owners in these situations, but only if a similar case is brought in their state. In the 2022 case, the justices ruled that Minnesota’s practice of keeping all the proceeds of a tax sale constitutes an illegal seizure of property.

“The taxpayer must render to Caesar what is Caesar’s, but no more,” Chief Justice John Roberts wrote in the unanimous decision.

But, under their current laws, 10 states and the District of Columbia have no means of returning the excess proceeds of a home sale; what Mountain States Legal Foundation lawyers representing Ms. Searle call “home equity theft.” The states include Alabama, Arizona, Colorado, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, and South Dakota.

Ms. Searle hopes her case will be the one to set things right in Arizona.

In Arizona, a county treasurer can place a lien on a property for taxes owed. These financial claims are then sold at an online auction. In the auction, buyers bid the lowest interest rate they intend to charge property owners to redeem their lien. The bidding begins at 16 percent and the lowest bid wins.

Purchasing a tax lien doesn’t transfer ownership of the property. In Arizona, the property owner has three years to pay the back taxes, which includes fees and interest. If it is not redeemed within that time, the lienholder may foreclose and sell the property.

Unsold tax liens are turned over to the state. The state has the same right to foreclose, but must return any excess proceeds to the former property owner.

In 2005, Ms. Searle bought a three-bedroom, two-bath house as a rental property for $255,000. The house is in Gilbert, Arizona, 22 miles southeast of Phoenix. Its 2024 property tax appraisal came to $376,800, but she stands to lose much more than the taxable value.

Various real estate websites estimate the current market value to sit somewhere between $420,000 and $510,000.

The investment firm Arapaho LLC Tesco purchased the tax lien on Ms. Searle’s property when it bought all of Maricopa County’s 2015 and 2016 tax liens. Arapaho stands to gain a significant profit if it sells the property under current law.

Arapaho’s contact information was not available. An internet search showed that the Phoenix-based company —which is involved in a number of legal actions in Arizona—lists Hamilton Municipal Financing of Altamonte Springs, Florida, as a principal. Hamilton is incorporated in Delaware.

According to PLF, tax liens are popular with banks, investment firms, and other financial institutions because they are seen as relatively secure investments.

Public data gathered by PLF shows that Maricopa County sold 567 tax liens between July 2012 and March 2021. A review of those records by The Epoch Times found that at least 424, or approximately three-quarters of those purchasers, were businesses.

“I have all my money invested in that home as my retirement instead of putting it in a CD [Certificate of Deposit] or some kind of a bank account. I can make a little money on the side to pay the mortgage and keep, and sell it when I need the money,” she said.

She’s shocked at how close she is to losing her life savings to an investment firm.

For 18 years, she lived in Chandler, Arizona, with her husband and son, Randy Searle. According to Ms. Searle, she led a typically comfortable, suburban middle-class American life. Her then-husband worked for a jewelry and memorabilia company serving high schools and colleges, and she trained horses.

She knew it was possible to lose property over unpaid taxes. But that happened to other people. It wasn’t part of her life or something she really knew very much about.

“I didn’t think about it,” she said.

Then came the divorce, and she had to consider many things she had never given much thought.

She had to find a way to support herself. Her son was grown, so she could afford a simpler lifestyle. Ms. Searle took her divorce settlement and purchased the house in Gilbert to use as a rental to supplement her income.

Her work goes beyond teaching horses to respond to commands. Many horse owners live and work far from the stables in Tucson, so Ms. Searle is their horse’s primary caregiver. She is responsible for arranging veterinary care, farrier services, feeding, and exercising the animals.

“I don’t have a nine-to-five job; I have a 24-hour job. Whenever there’s something wrong, I come down here and work on it, take care of it,” Ms. Searle said. “I’m doing it just because I enjoy it … it’s not like anyone’s making a lot of money here.”

Her son blames himself for his mother’s predicament.

Mr. Randy Searle, as the tenant at the Gilbert house, said it was his job to manage the property. At the same time, he was trying to get a solar energy company in Rhode Island off the ground.

“I had been responsible for paying [the property taxes], and when our company went out of business in Rhode Island, I didn’t have the money to pay them,” Mr. Searle told The Epoch Times.

Mr. Searle said he had worked out a plan with Arapaho to redeem the 2016 lien. However, due to a miscommunication, he didn’t realize foreclosure proceedings had been initiated over the 2015 taxes.

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