While it is customary for local governments in all states to seize and sell property when owners are delinquent on their taxes, 13 states and the District of Columbia allow local governments to keep the entire sales price rather than only keeping the proceeds necessary to satisfy the debt: Alabama, Arizona, California, Colorado, Illinois, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon and South Dakota. In Alaska, Idaho, Nevada, Ohio, Rhode Island and Texas and, localities may keep surplus proceeds for a particular public use, while in Montana, state law permits local governments to keep the surplus proceeds from the sale of non-residential properties.
The Supreme Court has ruled this practice unconstitutional. Past victims may have the ability to recover their equity through class actions.
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