In August 2011, Uri Rafaeli bought a three-bedroom, 1,500-square-foot home in the Detroit suburb of Southfield, Mich., for $60,000. He converted the fixer-upper into a rental property.
Two-and-a-half years later – and at the time unbeknownst to the retired engineer – Oakland County seized his property, put it up for auction and sold the house for $24,500. All this, after a mistake in calculating his property taxes left Rafaeli’s account delinquent by just $8.41. Oakland County ended up keeping all of the $24,500 from the sale, while Rafaeli, now 83, was left without the home and the income he made from renting it.
Rafaeli’s stunning case, which is at the heart of a legal battle currently being considered before Michigan’s Supreme Court, is an extreme example. Yet it is hardly unique: more than 100,000 homeowners in the state have fallen victim to an aggressive property tax law that legislators in Lansing passed two decades ago. Similar statutes have been passed in more than a dozen other states. . .
At the core of Martin’s argument is a clause in the Fifth Amendment, which states that the government cannot take a citizen’s private property for public use, “without just compensation.” In the case before the Michigan Supreme Court, Martin argued that Oakland County has violated both the state and U.S. constitutions under the Takings Clause by seizing and selling Rafaeli’s property and then failing to recoup him any of the money made from the sale.
Martin added that even if the county had paid Rafaeli the extra $24, 491.59 that it made from the sale of his property, that money still pales in comparison to what the retired engineer really lost given that he paid $60,000 for the house, pumped thousands more into fixing it up and has lost years of rent he could have collected were the property still in his possession. (Read more from “Michigan County Seized Retiree’s Home Over $8 Debt” HERE)