North Dakota Ends Home Equity Theft by Terminating Govt. Profits from Property Tax Delinquent Sales


Most states sell tax-delinquent property in auctions to the highest bidder and use the proceeds to pay all taxes, penalties, interest, and costs. Any leftover money belongs to the former owner. A new law was passed to stop local governments in North Dakota from seizing and selling valuable properties when the owners fell behind on property tax payments and then keeping all the profits as a windfall while the owners got nothing. This tax forfeiture abuse is known as home equity theft. In Alabama, Colorado, Maine, Massachusetts, Michigan, Minnesota, New York, Oregon, and Wisconsin, governments not only keep the value of unpaid property taxes and interest from the sale of a seized home, but they also keep the surplus value rather than returning it to the property owner. A study by University of Massachusetts School of Law Professor Ralph D. Clifford showed that in Massachusetts, municipalities took more than $56 million in home equity from property owners in a single year. In Arizona, Colorado, Illinois, Massachusetts, and Nebraska, private investors often reap the gains of home equity theft.

There is cause for celebration in North Dakota, as it joins the growing list of states that forbid home equity theft.

Until recently, local North Dakota officials could seize and sell valuable properties when the owners fall behind on property tax payments and then keep all the profits as a windfall. The owners? They get nothing.

Until April, the repugnant practice was legal in North Dakota. But thanks to the leadership of courageous state legislators and a forward-looking governor, a new law took effect April 23 that bars local officials from employing this abusive form of governmental theft.

To understand how it works, consider the case of Kevin Juhl of Drayton, who was out of state on a long freight haul when his wife called, sobbing. She told him that Pembina County officials had taken title to their home and were preparing to auction the property. The Juhls had fallen a couple of years behind on their property taxes, which run around $575 per year. They planned to pay it back with interest but lost track of the deadline.

To their shock, state law allowed the county to take full ownership of their property—including all their hard-earned equity. And the county demanded they pay $45,000 to get their home back.

Kevin was stunned that county officials could take the home he and his family had worked so hard to buy over such a small debt and with little warning.

“We are hardworking people who pay our share,” he said. “It felt like a setup.” But their story is just one of many.

Most states sell tax-delinquent property in auctions to the highest bidder and use the proceeds to pay all taxes, penalties, interest, and costs. Any leftover money belongs to the former owner.

North Dakota was among only a dozen states allowing the government to take more than it is owed. Property owners who owed back taxes were at the mercy of predatory local officials who would swoop in, seize their homes, and auction off the homes for cash. The owners got nothing, regardless of how much equity they might have held in the property.

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1 month ago

Your home is collateral for public schools to brainwash your children so politicians can control them. There are no property rights, you don’t own your home, you are merely renting it from the government!

1 month ago

Shelter is a necessity. Property tax itself is theft, just like a mob offering to perform services (protection) in exchange for extortion. Property tax is the definition of socialism and contrary to Life, Liberty and the Pursuit of Happiness, which is impossible without a place to grow independence.

1 month ago

What’s the difference? Government uses arbitrary assessments to fix value and then demands taxes at the point of a gun (threat of confiscation). PT is the worst worst kind of coercion.

John T. Vian
John T. Vian
1 month ago

It only proves that any property tax can only be criminal. The option to “pay or lose your home” is called extortion…

1 month ago

Paying a tax on something you allegedly own? What a queer concept.