Arizona is one of 13 states where homeowners can lose all of their home equity over tax debt, no matter how small.
A man in Arizona lost his home in 2016 over a tax debt less than $20, according to the state’s AARP chapter.
“How have we gotten to this point where it is feasible vulnerable seniors in Arizona can lose their home for being behind as little as $16 in their taxes,” the advocacy group’s state director Dana Marie Kennedy said in a press release.
Not only was the man out of a home, but he lost equity equal to 99.9% of the home’s sale price.
Arizona is one of 13 states where this can happen, according to AARP. The state allows investors to seize and sell a home if property taxes are unpaid, keeping the proceeds no matter how much equity the homeowner had.
The Equity Theft Protection Act, or HB 2445, aims to stop this practice.
The legislation, introduced by Rep. Anthony Kern, R-Glendale, would prevent homeowners from losing more money than what they owe. Once the debt is paid off, the owner would receive the surplus proceeds from the sale of the property.
The Pacific Legal Foundation, a California-based libertarian public interest law firm, says the current practice of bilking people out of home equity most often affects vulnerable communities.
“Most people don’t intentionally fail to pay their entire property taxes. It can be a simple mistake like miscalculating their payment,” Jim Maley, an attorney with the foundation, said in the press release.
“The elderly, sick, and poor are especially at risk of losing their most valuable asset—their home—for unpaid property taxes.”
The foundation released a report this week that found median equity theft in Maricopa County is $64,000 for a tax debt that is less than 1% of the home’s value.
The report also found that homeowners in Maricopa County lost over $9 million in home equity in the past four years.
“Hundreds of Arizonans have lost their homes for debts as small as $16.46,” the report noted.
The House Ways and Means Committee on Wednesday narrowly recommended HB 2445 pass with a 5-4 vote. The bill has yet to be discussed by the House Rules Committee.
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