Michigan county seized retiree’s house over $8 debt – now he’s combating again in state’s prime courtroom 

In August 2011, Uri Rafaeli purchased a three-bedroom, 1,500-square-foot house within the Detroit suburb of Southfield, Mich., for $60,000. He transformed the fixer-upper right into a rental property.

Two-and-a-half years later – and on the time unbeknownst to the retired engineer – Oakland County seized his property, put it up for public sale and bought the home for $24,500. All this, after a mistake in calculating his property taxes left Rafaeli‡s account delinquent by simply $8.41. Oakland County ended up protecting all the $24,500 from the sale, whereas Rafaeli, now 83, was left with out the house and the revenue he constructed from renting it.

Rafaeli‡s gorgeous case, which is on the coronary heart of a authorized battle at present being thought of earlier than Michigan‡s Supreme Courtroom, is an excessive instance. But it’s hardly distinctive: greater than 100,000 owners within the state have fallen sufferer to an aggressive property tax legislation that legislators in Lansing handed twenty years in the past. Comparable statutes have been handed in additional than a dozen different states.

‘You will have a state of affairs the place an individual owed $8 and misplaced their home. I imply, how is that equitable?’

— Michigan Supreme Courtroom Justice Richard Bernstein

Act 123 of 1999 was meant to hurry up the redevelopment of blighted properties amid Michigan‡s financial woes, however critics of the statute say it has allowed county officers to behave as debt collectors and line their coffers by retaining the surplus income made by promoting homes with unpaid property taxes — irrespective of how paltry the debt.

HOMEOWNER CENSORS HALLOWEEN DECORATION AFTER HOA DISAPPROVES OF DISPLAY

“When the federal government takes property to settle a debt, they’ve to offer the additional cash they make again to you,” Christina Martin, a lawyer with the Pacific Authorized Basis who’s representing Rafaeli in his case towards Oakland County, instructed Fox Information. “It doesn‡t matter what legislation Michigan passes, they’ve the constitutional obligation to pay again any greater than they’re owed.”

In a current op-ed for The Detroit Information, Rafaeli mentioned he was "shocked and indignant" over the county's actions.

"Quickly I’d be taught that whereas I had signed up for a bit of the American Dream with my funding, I used to be getting into a bureaucratic nightmare — all because of Michigan‡s Draconian tax forfeiture legal guidelines, which I‡m now difficult in courtroom," he wrote.

On the core of Martin‡s argument is a clause within the Fifth Modification, which states that the federal government can not take a citizen‡s non-public property for public use, “with out simply compensation.” Within the case earlier than the Michigan Supreme Courtroom, Martin argued that Oakland County has violated each the state and U.S. constitutions underneath the Takings Clause by seizing and promoting Rafaeli‡s property after which failing to recoup him any of the cash constructed from the sale.

The property that was seized from Uri Rafaeli by Oakland County. (Google Maps)

Martin added that even when the county had paid Rafaeli the additional $24, 491.59 that it constructed from the sale of his property, that cash nonetheless pales compared to what the retired engineer actually misplaced provided that he paid $60,000 for the home, pumped hundreds extra into fixing it up and has misplaced years of hire he might have collected had been the property nonetheless in his possession.

Property values in Southfield have additionally skyrocketed since Rafaeli purchased the house in 2011 for $60,000, with estimates at present valuing the home at greater than double what he paid.

“The cash the county made falls far brief for Mr. Rafaeli,” Martin mentioned. “In Mr. Rafaeli‡s case, he ought to get rather more than that.”

LUXURY BUILDINGS BRING ELEVATOR PRIVACY TO THE NEXT LEVEL

Rafaeli‡s tax woes began a few yr after he bought the home in Southfield when he was notified that he had underpaid his 2011 property taxes by $496. Within the meantime, he had continued making the next property tax cost on time, and in January 2013 he tried to settle the excellent debt he had with Oakland County.

However attributable to a mistake he made in calculating his curiosity, he was wanting paying off his stability by $8.41. The invoice finally grew to $285 with penalties and curiosity.

The Oakland County Treasurer‡s Workplace tried to gather the debt a lot of occasions – sending mailed notifications to each the property in Southfield and to an deal with it had for Rafaeli in Michigan. However Rafaeli had by that point moved out of state, and his tenants in Southfield didn’t ahead the notices.

Video

In February 2014, the property was finally seized by the county and was one in all 11,000 houses put up for public sale.

Rafaeli, nevertheless, was unaware that his property was not his property and continued to pay property taxes even after it was seized, his legal professionals mentioned. He solely grew to become conscious that one thing was amiss when he stopped receiving hire funds from his tenants – who not resided on the seized house.

“You shouldn‡t should depend on the mercy of a tax collector to have your constitutional rights protected,” Martin mentioned. “No quantity of mail ought to enable the federal government to steal your property.”

SUPREME COURT LETS SANDY HOOK FAMILIES' LAWSUIT AGAINST GUNMAKER PROCEED

After discovering that his property had been seized and bought, Rafaeli and his household employed native legal professionals to assist him regain both his home or his cash.

These efforts, nevertheless, proved fruitless as his case – through which his legal professionals argued that his due course of rights had been violated – was first dismissed by the Oakland County Courtroom and later the Michigan Courtroom of Appeals dominated towards him, citing the state‡s civil forfeiture legal guidelines.

It was right here that Martin and the Pacific Authorized Basis stepped in to assist – petitioning the Michigan Supreme Courtroom. The state‡s excessive courtroom granted Rafaeli‡s case a evaluate after Martin argued that his constitutional rights had been violated underneath the Takings Clause.

The Oakland County Treasurer‡s Workplace declined Fox Information‡ request for remark, however in a written transient to the courtroom, the county‡s legal professionals argue that “by failing to pay again taxes and failing to redeem the property earlier than public sale, the taxpayer not possesses an curiosity for the federal government to ‘take.‡” The transient additionally famous that Rafaeli was given “quite a few discover provisions and alternatives” to pay his stability.

William Horton and John Bursch, the county‡s attorneys, contested Martin‡s assertion that the county‡s actions violated the Takings Clause – saying within the transient that “tax collections usually are not the taking of personal property for public use within the constitutional sense” and that Martin‡s argument is much like ones beforehand shot down by courts throughout the nation.

“That is hardly the primary time {that a} delinquent taxpayer has introduced a declare to get better the ‘surplus‡ proceeds in a tax sale,” the legal professionals mentioned.

In courtroom final week, Bursch argued {that a} ruling in favor of Rafaeli would set a precedent that might finally bankrupt Michigan counties by forcing native governments to compensate all owners in comparable conditions. He estimated it will value round $2 billion.

Michigan Supreme Courtroom Justice Richard Bernstein didn’t seem to agree with the county lawyer‡s evaluation of the state of affairs.

"The interpretation you gave was very dramatic: that that is going to finish faculties, and the counties are going to crumble, and society is simply going to implode," Bernstein mentioned. "You will have a state of affairs the place an individual owed $8 and misplaced their home. I imply, how is that equitable?"

Rafaeli's case will likely be determined someday earlier than the top of July 2022.

Martin hopes {that a} ruling in favor of Rafaeli won’t simply be a victory for the 83-year-old retiree, however will set a precedent in Michigan and throughout the nation — presumably resulting in a ruling by the U.S.  Supreme Courtroom on an identical case sooner or later.

There are 14 different states within the U.S. which have statutes on the books much like Michigan, and 5 of these states – Arizona, Colorado, Illinois, Massachusetts and Nebraska – enable non-public traders to generate profits off the sale of foreclosed houses.

“The federal government shouldn’t be making a windfall … when amassing unpaid taxes,” she mentioned. “It is a apply that should come to an finish.”