Unpaid

property
tax
debts
are
leading
to
preventable

foreclosures,
with
the
greatest
impacts
on
Black
and
Latino
households
and
older
homeowners
living
on
fixed
incomes.
But
if
states
take
proactive
measures
to
reform
policies
and
disclosures
around
tax
foreclosures,
this
could
go
a
long
way
to
prevent
unnecessary
home
displacements.

This
is
according
to
a

jointly
issued
brief
published
this
week
by
the


National
Consumer
Law
Center
(NCLC),
the


American
Land
Title
Association
(ALTA)
and


AARP.

“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,”
Andrea
Bopp
Stark,
a
senior
attorney
at
NCLC,
said
in
a
statement.
“States
should
actively
promote
available
tax
relief
programs
that
include
prepayment
and
repayment
plans,
affordable
interest
rates
and
limited
penalties
on
past
due
taxes
and
reasonable
time
periods
and
terms
to
redeem
the
property.”

The
coalition
of
trade
groups
makes
several
recommendations
around
seven
core
issues
at
the
state
level.
These
include
requiring
“clear,
meaningful”
notice
at
each
stage
of
the
tax
foreclosure
process;
ensuring
both
owners
and
inheritors
of
ownership
receive
notice
of
foreclosure
stages;
creating
alternatives
to
tax-initiated
sales;
and
making
redemption
costs
both
“affordable
and
accessible.”

The
groups
also
recommend
protecting
older
adults
and
low-income
homeowners
who
“struggle
to
pay
property
taxes”
to
prevent
the
root
causes
of
foreclosure;
improving
and
creating
new
property
tax
exemptions;
and
requiring
“market-driven
tax
foreclosure
processes
for
owner-occupied/involved
residential
properties
if
there
is
a
tax
sale.”

“Homeownership
sustainability
is
a
key
part
of
wealth
creation
and
preservation,”
said
Elizabeth
Blosser,
vice
president
of
government
affairs
at
ALTA.
“Good
public
policy
should
promote
preventative
measures
to
avoid
the
loss
of
property
to
tax
foreclosure
sales.
This
is
a
critical
component
of
housing
opportunity
and
long-term
affordability.”

Seniors
on
fixed
incomes
can
be
particularly
vulnerable
to
tax
foreclosures,
particularly
as
property
taxes
have

risen
considerably
in
recent
years.

Improving
disclosures
and
consistently
communicating
with
the
property
owner
at
each
stage
of
the
process
can
be
critical
in
avoiding
an
unnecessary
foreclosure,
the
groups
said.
The
amount
owed
in
taxes
often
pales
in
comparison
to
the
value
of
a
foreclosed
property,
according
to
Jenn
Jones,
vice
president
of
financial
security
and
livable
communities
at
AARP.

“States
must
ensure
that
the
tax
foreclosure
process
leaves
the
consumer
who
lost
their
home
in
the
best
position
to
recover
financially,”
Jones
said.
“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.
And
in
some
states,
homeowners
do
not
receive
any
of
the
proceeds
from
the
sale.
AARP
is
working
in
statehouses
across
the
country
to
ensure
this
money
is
rightfully
returned
to
homeowners.”

In
the
brief,
the
groups
also
cite
a
2023


U.S.
Supreme
Court
decision
as
a
reason
for
revising
existing
rules.

“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
equity
after
the
tax
debt
and
costs
are
paid,”
the
joint
brief
explained.

“Many
states
will
now
need
to
take
a
close
look
at
their
tax
foreclosure
laws
to
make
sure
that
they
are
aligned
with
the
precedent
set
by
Tyler.
As
they
do,
they
should
revise
the
laws
to
protect
property
owners
from
unnecessary
tax
foreclosures
and
preserve
the
equity
in
their
homes.”

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