Government Foreclosure Practice Challenged In The Supreme Court
When you owe money to the government for something related to your property, in some cases, just like a bank, the government can foreclose on that property. But what can the government take from you in that foreclosure?
That is a question that will apparently be addressed by the United States Supreme Court in the upcoming months.
How Foreclosure Normally Works
The way that foreclosure works—whether done by a private lender, or a state or government—is that if the foreclosure is granted, your property is sold at public auction. Your property may sell for much more than what you owe on it. This is especially true if you owe, for example, tax liens, which, although costly and expensive, usually aren’t anywhere near the full value of your home.
When your home sells at foreclosure, the government takes, from the proceeds of the sale, what you owe to it, and returns the balance of the funds from the foreclosure sale to you.
Minnesota Policy is Challenged
A new case out of the State of Minnesota may change that the normal foreclosure process. In Hennepin County, Minnesota, things work differently. There, the government can sell your property if you owe it money, and then keep the full balance of the foreclosure sale.
That’s exactly what happened to a woman who owed $15,000 to the government. Her property sold for $40,000 at a foreclosure auction, but the woman got nothing back. The government kept all of those funds, which far exceeded the amount that she owed them.
What Does the Constitution Say?
The United States Constitution says two things, relevant to this case.
First, it says that the government generally cannot just take your property without compensating you for it. Thus, the woman sued, saying that taking the excess funds was an illegal taking under the Constitution.
Secondly, the constitution forbids excessive fines or penalties. The woman contended that the taking, in her case about $25,000 above what was owed to the government, was an unfair, punitive, and unconstitutional governmental “punishment.”
This is an increasing problem, at least in Minnesota. By some measurements, about 1,000 residents have been in the same situation, having the entirety of the value of their properties taken, all despite owing amounts that came to around 6-8% of their property’s total value.
The Practice Could Spread
What does this have to do with Florida?
If the United States Supreme Court finds this practice constitutional, governments may see it as a way to make a lot of extra money.
Buying or selling property, or do you need help with a foreclosure? Contact the Tampa foreclosure attorneys at Gilbert Garcia Group, P.A. today.
Source:
scotusblog.com/case-files/cases/tyler-v-hennepin-county-minnesota/