Michigan Supreme Court ends home equity theft

Rafaeli, LLC v. Oakland County

Lansing, Michigan; July 17, 2020:  In a momentous victory for homeowners and their property rights, the Michigan Supreme Court ruled today that counties may not steal the savings that people stored away in their homes.  

Until today, counties could seize property from those who fall behind on their taxes — like Uri Rafaeli, whose tax debt was a mere $8.41 — then sell the property for amounts much larger than the initial debt and pocket all of the proceeds from the sale. Oakland County took all of Rafaeli’s home equity when it was sold for $24,500 to settle his small debt, an injustice that the state’s high court overturned today. 

“We are thankful that the court today vindicated Uri Rafaeli and Andre Ohanessian’s property rights,” said Christina Martin, a senior attorney at Pacific Legal Foundation, which represents Rafaeli and Ohanessian free of charge. “This decision will protect people across Michigan by prohibiting county governments from stealing from struggling property owners.” 

“No one in Michigan should lose the entire equity in their home or land for falling behind on their property taxes. We will continue the fight to help other vast numbers of people whose nest eggs have been robbed by this abuse of tax foreclosure law. Today’s decision sends a message across the country that this kind of abuse should not be tolerated in the United States any longer.” 

While today’s decision is welcome news for property owners in Michigan, 12 other states in the country allow similar unconstitutional practices, including Arizona, Colorado, Massachusetts, and Nebraska. Pacific Legal Foundation is fighting to end home equity theft throughout the country.

Mr. Rafaeli’s case was undoubtedly helped by the national coalition that joined PLF as friends-of-the-court. PLF’s co-counsel was Andrew Fink. Aaron Cox and Mark Wasvary filed the original complaint and will continue to work seeking class action status on remand.

Read the opinion of the Michigan Supreme Court and more information about Rafaeli, LLC v. Oakland County.