Government should not make a profit when it seizes people’s property for back taxes. But it’s legal in Oregon.
Tax entities in Deschutes County made a profit of about $65,827 when Deschutes County sold Tarresa Hutchinson’s property for back taxes. Lane County made a profit of about $56,000 when it sold Timothy Waterman’s property for back taxes.
A class action complaint makes those allegations and wants to end the practice of counties making profits when it seizes real estate. Lawmakers should change the law.
Under state law, a county can seize property with unpaid real estate property taxes. It can then sell it and keep the money. It doesn’t just get the value of the unpaid taxes and any associated county costs. It gets all the money.
And as the complaint says, in Oregon it’s required to keep it all. There’s no way for the former owner to get any value back.
We should stress, as Deschutes County Legal Counsel David Doyle pointed out, that the county does not get to keep all the money. It is distributed to the various entities that collect property taxes. That’s a good point. It doesn’t make the state-sanctioned practice any less egregious.
In Hutchinson’s case, her mother, Brande Johnson, had owned a 50% interest in a plot of land at 25390 Bachelor Lane in Bend. When Johnson died in 2007, that interest passed to Hutchinson. She was a minor at the time.
Property taxes on the property went unpaid for years — from 2008-2012. The amount climbed to $2,101, according to the complaint. The county filed for foreclosure. After it obtained the deed for the property, it auctioned it off in 2019. By then the back taxes and fees were $4,172.
The county sold the property for $89,000. Subtract what the county paid to get the property ready for sale and the money owed and the county tax entities made $65,827, according to the complaint.
The facts of the Lane County case are different. But once again, the money over and above the value of the taxes owed and any additional costs were kept.
Some states have abandoned these sorts of seizures or found them unconstitutional. Other states allow that any surplus can be returned to the owner.
We don’t know what will happen with this complaint. It’s never been right, though, for the government to take property without just compensation. State law allows it to happen in Oregon.