STATE THEFT IN REAL PROPERTY TAX FORECLOSURE PROCEDURES.

Author's Synopsis: There are three major property tax foreclosure systems used in the United States, and one of them-the surplus retention system-prohibits former property owners from receiving the surplus from a property tax foreclosure sale. Surplus retention systems incentivize wrongdoing by allowing foreclosing governments to profit from property tax foreclosures. Surplus retention systems also have a strong negative effect on the most vulnerable people in the population because these are the people who are most likely to fall behind on property tax payments, fail to receive notice, and lose all their home equity. Finally, surplus retention systems violate the Takings Clause of the United States Constitution by allowing local governments to commit a taking for public use without providing just compensation. The states that use surplus retention systems should change their laws to allow property owners the opportunity to recover the surplus from a tax foreclosure sale. This change would be in line with the requirements of the Takings Clause and with Supreme Court decisions. Importantly, allowing property owners a chance to recover the surplus would also ensure that states are protecting their citizens’ Fifth Amendment rights by providing just compensation for a taking of property as required by the United States Constitution. [ABSTRACT FROM AUTHOR]