Idaho Gov. Brad Little signed a bill into law ending home equity theft in the latest statewide effort to protect homeowners’ property rights.
The Idaho legislature unanimously approved House Bill 444 in both chambers, which Little signed into law on March 11. The legislation, sponsored by State Rep. Jeff Ehlers and Sen. Phil Hart, removed a home equity theft loophole in state law, a practice allowing local governments to collect outstanding tax debts on repossessed property without providing compensation to the homeowner after resale, even if the sale value is greater than the tax debt owed.
“The Supreme Court got it right when they said: ‘The taxpayer must render unto Caesar what is Caesar’s, but no more,'” Ehlers told Fox News. “Ending home equity theft is a matter of fairness for all property owners. I’m glad my colleagues saw this as well and helped close this loophole in Idaho.”
Under the previous law, Idaho county governments could transfer the repossessed property to another agency and dodge the sale without paying the original homeowner, KTVB 7 reported. However, the state’s newly-passed legislation would force the government to sell the property and fairly split the sale value with the homeowner.
Idaho Gov\. Brad Little signed House Bill 444 into law on March 11, ending home equity theft in the state. The bill removed a home equity theft loophole that allowed local governments to repossess property and transfer it to another agency and dodge the sale without compensating the original homeowner. (Darin Oswald/Idaho Statesman/Tribune News Service via Getty Images)
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The action makes Idaho the fourth state to end home equity theft — along with Nebraska, Maine and South Dakota – since the Supreme Court decided home equity theft was unconstitutional in its May 2023 ruling in Tyler vs. Hennepin County. The high court unanimously ruled in favor of Geraldine Tyler, a 94-year-old Minnesota resident, after she lost $24,000 to the state when it sold her condo for more than twice what she owed in taxes.
The Supreme Court decided home equity theft was unconstitutional in its May 2023 ruling in Tyler vs. Hennepin County. Four states have banned the practice since the high court’s ruling. (AP Photo/J. Scott Applewhite, File)
Tyler’s condo was seized in Hennepin County, Minnesota, in 2015 after accumulating around $15,000 in outstanding property taxes, penalties, interest and costs. The county acquired the property and sold it for $40,000, which it was able to keep without paying Tyler under the state’s forfeiture laws.
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“That got my attention,” Ehlers told local outlet KTVB 7. “It really just feels like an overreach on government power.”
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Nine states and Washington, D.C., have home equity theft laws in place, and nine other states allow the practice under certain circumstances despite the high court’s 2023 ruling, according to the Pacific Legal Foundation.
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“One of the things that really got me worked up is some of these states and some of these cities do this so much that they actually put a budget item for this type of taking, and they rely on that as revenue to the government,” Ehlers said.
“I think the winners [in H444 are] the Idaho taxpayer, the Idaho property owners, so that they won’t have to face this unfairness in our state,” he continued.
The Idaho law takes effect July 1.
