Consumer and Industry Advocates Outline Reforms to Property Tax Foreclosure Laws to Promote Sustainable Homeownership

WASHINGTON, May 30, 2024 /PRNewswire/ -- Across the nation, homeowners are losing their homes and the equity they've built due to unpaid property tax debts, and older adults, those on low or fixed incomes, and Black and Latino/Hispanic households are most at risk. In 2023, the U.S. Supreme Court ruled in Tyler v. Hennepin County that it is unconstitutional for a local government to take a property in a tax foreclosure and keep the excess surplus after the tax debt and costs are paid. However, many states have yet to revise these out-of-date laws.

The National Consumer Law Center (NCLC), AARP and the American Land Title Association (ALTA) have produced a new issue brief with recommendations for states to revise their laws to protect property owners from unnecessary tax foreclosures.

"States must enact laws that protect those most at risk of losing their homes to tax foreclosure, particularly lower-income homeowners and those aged 65 or older," said Andrea Bopp Stark, senior attorney at the National Consumer Law Center. "States should actively promote available tax relief programs and reasonable time periods and terms to redeem the property."

"Homeownership sustainability is a key part of wealth creation and preservation," said Elizabeth Blosser, vice president of government affairs at the American Land Title Association. "Good public policy should promote preventative measures to avoid the loss of property to tax foreclosure sales."

One of the most important steps a state can take to prevent tax foreclosure is requiring clear, comprehensive, plain language notices at every stage of the tax foreclosure process. States should ensure that notices delivered to homeowners are translated into the consumer's language of choice and include information about remedies and assistance programs available, and that they note the consequences of each stage of the tax foreclosure process.

"States must ensure that the tax foreclosure process leaves the consumer who lost their home in the best position to recover financially," said Jenn Jones, vice president of financial security and livable communities at AARP. "Property tax debts are often well below the value of a home, and many foreclosed homes sell for more than 10 times the amount owed in unpaid taxes."

Additionally, heirs' property — property passed down among family members without going through probate — is too often lost in a tax sale when heirs fail to receive notification of the tax sale foreclosure and lack access to tax relief programs.

To ensure homeowners receive the maximum amount of home equity possible, NCLC, AARP, and ALTA are calling for states to require that municipalities attempt to sell properties using a real estate agent before conducting a public auction and return any excess sale proceeds to the former owner, including heirs, and create a simple process for claiming the excess proceeds.

Contacts: NCLC, Stephen Rouzer ([email protected]); ALTA, Megan Hernandez ([email protected])

SOURCE American Land Title Association