Equity Theft In Real Estate Foreclosure Sales
Wisconsin property owners work hard to own their home and land. Unfortunately, because of difficult times and other unforeseen circumstances, some end up losing their property due to foreclosure.
Under Wisconsin’s property tax enforcement law, if a property owner is unable to pay their property taxes, counties are authorized to seize the property and sell it to pay off the property taxes owed. (Wis. Stat. § 75.63). However, if the county nets any proceeds from the sale after paying the past due property taxes, the county may keep those net proceeds.
Under the Fifth Amendment to the U.S. Constitution, a landowner’s property rights are protected through the “takings clause,” which prohibits private property being taken for public use without just compensation. When it comes to home equity theft, counties are trampling on the constitutional rights of property owners by pocketing the net proceeds after a foreclosure sale that should be returned to the former property owner.
The Wisconsin REALTORS® Association supports legislation in 2022 that would modify current law to require counties to pay any net proceeds in a property tax foreclosure sale to the former owner of the property. This legislative fix built on fairness would eliminate home equity theft by responsibly ensuring property taxes get paid while providing the property owner any additional proceeds from the sale of their property.