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Home Equity theft in which the Owner is denied the remaining equity in their property after a foreclosure has been prevalent for decades.

Home Equity Theft, Tax Lien Sales and the Fifth Amendment

Home Equity theft happens when the owner is denied the remaining equity in their property after a foreclosure sale. This map shows which states chose to allow home equity theft without recourse. It also highlights loophole states which allow home equity theft under certain situations as well as states which protected home equity.

Ohio is one of the loophole states. Ohio’s foreclosure law distributes remaining funds from the sale to the property owner unless a government entity wants the property. The loophole lets the government entity, such as the county land bank, keep the remaining equity. Constitutional law requires fair compensation when one’s property is taken for public use. 

On May 25th, 2023 the Supreme court of the United States unanimously ruled in favor of the plaintiff, 94 year old Geraldine Tyler in Tyler vs Hennepin County. The Minnesota County seized her property when she was unable to pay $2,700 in property taxes plus $12,300 in fees. The county then sold the property and kept the $25,000 profit rather than returning the equity to Geraldine. This act is in direct conflict with the Fifth Amendment of the Constitution which prohibits taking private property without payment of just compensation.

This unanimous ruling is also a game changer for investors in various states who profit off the misfortune of property owners by purchasing tax liens from the county as follows:

  1. Local Municipality Creates the Tax Lien Certificate.
  2. Tax Lien Certificate Is Put Up for Sale by Auction.
  3. Winning Investor Takes Control of The Tax Lien Certificate.
  4. Investor Pays Balance of Taxes Owed.
  5. Foreclosure or Redemption.

Prior to the Supreme Court ruling, this practice was most lucrative in Alabama, Arizona, Colorado, District of Columbia, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon and South Dakota.

While some states allow individual tax lien certificate sales, Ohio law does not provide for the sale of individual tax lien certificates or “over-the-counter” liens. Ohio liens are put up for auction as a single block for a purchase price, often million dollars, eliminating small investors while catering to large corporate investors.

Per section 323.25 of the Ohio Revised Code, taxes must be paid within sixty days from the date they are certified delinquent or the property is subject to foreclosure for tax delinquency.

The Supreme Court ruling is a truly a blessing for any property owner at risk of losing their home or any other property due to delinquent property taxes. The homeowner will now receive any remaining equity in the property after any liens and associated expenses have been paid.

When the time comes to sell your real estate it may be prudent for a homeowner to consider utilizing an Ohio Broker Direct Flat Fee MLS Listing rather than going the traditional route.

Selling real estate on your own without the assistance of a traditional service Real Estate Brokerage will require both commitment and due diligence for which you may be rewarded by saving thousands of dollars in commissions. Maximizing marketing exposure is key. We have SOLD well over a BILLION DOLLARS in Real Estate & Saved Sellers Millions of Dollars in Real Estate commissions. Please contact our team to learn how the For Sale By Owner Flat Fee MLS Listing Options at Ohio Broker Direct will enhance your marketing exposure to ensure a more expeditious sale, yielding a higher price with better terms that suit your specific needs. Reach out to us directly, visit our blog page or sign up for our newsletter to receive the latest information to ensure you have the knowledge to maximize your profit.


Joan Elflein and Tana Lantry, Brokers / Ohio Broker Direct Ohio Broker Direct & its Brokers or Associates assumes no responsibility or liability for any errors or omissions in this blog, we advise all participants engaged in the buying or selling of Real Estate to enlist the services of a Real Estate Attorney.

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