Many Coloradans spend a lifetime increase fairness of their residence, making a monetary cushion that’s usually the sum of their life financial savings. Few individuals know that these financial savings might be unfairly confiscated by the federal government within the occasion of a property foreclosures. It’s time for the state legislature to step up and ban residence fairness theft.
When owners fall on arduous instances and get behind in taxes, native authorities could file liens towards the property. If these again taxes aren’t paid over a interval of years, the property could also be foreclosed on and offered.
Frequent sense and equity would dictate that the federal government would get well the taxes and charges it’s owed however the house owner would have the ability to maintain the remaining fairness as soon as all money owed are glad. However, till a U.S. Supreme Court docket determination final yr, authorities was permitted to maintain all of the proceeds, usually nicely above the tax debt.
That’s theft. And the Supreme Court docket dominated that it’s unconstitutional with Chief Justice Roberts crystallizing the problem. “The taxpayer should render unto Caesar what’s Caesar’s — however no extra,” he wrote, enjoying a widely known Bible passage.
At the moment, Colorado legislation permits for all of the fairness to be retained, and it’s as much as the Colorado legislature to step in and convey our legal guidelines into line with the Supreme Court docket determination.
Residence fairness theft is a major drawback, right here in Colorado and throughout the nation. In accordance with the American Property House owners Alliance, which tracks this concern carefully, greater than 8,600 U.S. properties had been affected between 2014 and 2021 with a lack of $780 million in residence fairness financial savings. In Colorado, losses are estimated at a minimal of $45 million statewide.
On common, owners lose 97 p.c of their fairness, in response to the alliance’s report.
Residence fairness theft presents a very pernicious risk for Colorado seniors. Many older individuals depend on the fairness of their properties to fund their future or present a legacy to cross on to their kids and grandchildren. For an individual’s complete nest egg to be put prone to confiscation if their property should be offered to fulfill a lien might be financially devastating.
Right here’s how the method could be reformed.
Below the present course of, when owners are behind in a tax debt to native authorities, they are often offered a interval of six months or extra on common to pay these again taxes. But when a property should be offered at foreclosures, any and all money owed to authorities ought to, after all, be glad. However the remaining fairness must be returned to the house owner, not saved by the federal government.
Such simple reform laws must be a layup for the Colorado legislature, one which lawmakers in each events ought to eagerly embrace. Whether or not one is a Democrat or Republican, no elected official ought to settle for the federal government taking from Coloradans what it isn’t owed, or turning a revenue on a property sale on the expense of seizing the life financial savings of households who fell on arduous instances.
On this period of deep partisan divisions, it’s uncommon to search out a problem the place all 100 legislators and the governor can unite and enact a reform that can profit Coloradans throughout the state. Eradicating the specter of residence fairness theft is a promising alternative for our lawmakers to come back collectively on behalf of house owners throughout our state.
Michael Fields is president of Advance Colorado, a nonprofit devoted to educating Coloradans on the good thing about sturdy and sustainable coverage options in fiscal accountability and transparency, restricted authorities, free enterprise, decrease taxes, sturdy public security, and an accountable schooling system.
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