Federal and State governments have the power to take private property — such as land, homes, cars, boats, etc. — for a variety of reasons. Sometimes, the government takes private property due to unpaid taxes and sells the property to collect the tax debt. Other times, the property is seized as part of a criminal or civil case. Property can also be forfeited to the government for a variety of other reasons. In all of these circumstances, however, the U.S. Constitution makes it unlawful for private property to be taken without “due process.” For many individuals, such government seizures are unlawful and can be challenged as part of a class action.
The lawyers at Sarraf Gentile LLP have decades of combined experience fighting fraud, litigating class actions nationwide and recouping millions of dollars for their clients. The firm uses its litigation expertise and extensive experience working with government lawyers to represent individuals who have had their property seized or taken by the government. The firms results can be viewed here and all consultations are free and confidential.
Types of Properties Subject to Government Taking
To collect on a debt or punish wrongdoing, the government may try to take anything that can be used or sold. This can include land, buildings, cars, trucks, boats, planes or jewelry. Almost anything! The government can then sell the property, give it away or save it for “official use.” In some cases, the government may simply destroy the property. In any such situation, property owners have rights.
Tax Seizures & Foreclosures – Keeping the Surplus Equity or Property Value in Excess of the Tax Debt
Where taxes are unpaid, the government typically takes or seizes private property (such as land, homes, cars or boats) and sells it. This is usually done in a foreclosure sale or court proceeding. The government then recoups the unpaid taxes (and any penalties or costs associated with the taking) from the foreclosure sale. Any surplus, extra funds or value in excess of the tax debt, typically belongs to the tax debtor or the original owner of the property. This surplus should normally be returned to the owner. Unfortunately, however, some government agencies simply keep the surplus – money that does not belong to them! This is sometimes referred to as “Home Equity Theft.”
Home equity theft is grossly unfair. It strips the former homeowner of the value of their property above and beyond their tax debt.
On May 25, 2023, the U.S. Supreme Court held that such surplus takings were unconstitutional and that property owners can recover the surplus from a tax foreclosure sale. The case, Tyler v. Hennepin County, was a unanimous decision and found that a county’s retention of the excess value of a home in a tax sale violated the Takings Clause of the Fifth Amendment. The decision, which reversed the lower courts, gives new rights to property owners in states that do not reimburse property owners the surplus funds in excess of a property tax foreclosure sale. Individuals who have had their properties foreclosed on due to a tax debt but who did not receive the excess value have claims that can be brought on a class wide basis.
Residents of Oakland County, Michigan, recently participated in a class action alleging that between 2009 and 2020 the county foreclosed on the homes of property owners for unpaid taxes and unlawfully retained more than the tax delinquency after the properties were sold at a tax foreclosure auction. The case, Bowles, et al., v. County Of Oakland, et al., 20-12838 (E.D. Mich.), was resolved after the country agreed to pay a $38 million settlement.
Some of the states that have laws or practices where the government keeps the surplus value of a home that has been subject to a tax foreclosure action include: Alabama, Arizona, Colorado, Illinois, Maine, Massachusetts, Minnesota, Nebraska, New Jersey, New York, Oregon, South Dakota, and the District of Columbia.
Civil or Criminal Forfeitures – Taking Property From Owners Who Did Nothing Wrong
Government agencies enforce many laws. These include criminal prosecutions as well as civil actions. For a variety of reasons – typically as a form of punishment – the government will seize personal property or direct the accused to forfeit such property. For example, criminal defendants frequently have their bank accounts seized. Unfortunately, however, even individuals who have done nothing wrong, can have their property taken. In many states, for example, individuals who have had their car stolen (or used by a third party) in the commission of a crime, can sometimes have their cars taken and only returned after months, or years, of effort, if at all. In some cases, they can only get their cars back after paying a fine. Many states have laws that allow the government to keep the property forever, even though the owner may never be convicted of a crime.
Here are a few examples:
- Police in Arizona arrested a man for stealing auto parts and seized the truck he had put them in. The truck was forfeited, even though it belonged to the man’s mother, who had done nothing wrong. Cox v. Voyles, et al., No. 2:15-cv-01386 (D. Az.)
- A New Jersey woman lost her car after her son used it—without her knowledge or consent—while selling marijuana. It took two years of litigation to get it back. State of New Jersey, et al., v. One 1990 Ford Thunderbird, et al., 371 N.J. Super. 228, 852 A.2d 111 (Sup. Ct. NJ, App. Div.)
- A Michigan woman had a car she co-owned with her husband forfeited after he used it to solicit a prostitute – a crime which she was unaware of and not involved in. Bennis v. Michigan, 516 U.S. 442 (1996)
Many states and municipalities have civil forfeiture laws that incentivize law enforcement to seize property for financial gain, allowing some to retain 100% of the value of the forfeited property. Some of the states with the worst civil forfeiture laws – laws that provide a strong financial incentive for law enforcement to seize property and a low standard of proof the government must meet to seize property – include: Arizona, Florida, Georgia, Illinois, Massachusetts, Michigan, New Jersey, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington (among others).
On April 17, 2023, the U.S. Supreme Court agreed to review the case of Culley v. Marshall in which individuals have challenged the government’s ability to use civil asset forfeiture laws to seize property used in connection with a crime. In one example from that case, Halima Culley let her son use her car. While driving, Culley’s son was pulled over by police, who searched the vehicle and found drugs. The police seized the vehicle and arrested Culley’s son. It took Culley 20 months for law enforcement to return her car. The outcome of the case may determine the ability of state law enforcement to use civil asset forfeiture.
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Individuals who have had their property seized or taken by the government may have a right to compensation. The lawyers at Sarraf Gentile LLP have decades of combined experience fighting fraud, litigating class actions nationwide and recouping millions of dollars for their clients. All consultations are free and all class actions are conducted on a contingency basis – meaning the attorneys only get paid if they are successful, they are only paid from the money they recoup and they only get paid if the court approves it. Sarraf Gentile is a low-volume high-priority litigation-focused firm that deliberately limits the number of cases it accepts in order to give each client and case the utmost attention. The firms results can be viewed here and all consultations are free and confidential.