Attorneys for Nebraska man warn about ‘legalized theft’ of home equity

OMAHA, Neb. (WOWT) - A small one-story home near an elementary school in Scottsbluff, Nebraska, now belongs to private investors in Omaha, Continental Resources.

Kevin Fair has had the house for almost 20 years. He says it was paid for, now valued at $60,000.

But when his wife got sick a few years ago, bills piled up. He owed $588 in back taxes.

Kevin Fair is still in the home, even though he doesn’t own it anymore -- because he’s fighting the case in court. In Nebraska, if someone falls behind on property tax payments, no matter how small, the county treasurer offers up the outstanding tax liens to private bidders every March.

Those private bidders pay the taxes, then the county is made whole and wipes its hands of the case.

The investor then waits it out for three years and sends a letter to the homeowner that, in this case, because of interest, the $588 owed in taxes ballooned to $5,268.

If Kevin Fair paid that, he’d be able to keep his house.

He didn’t pay.

So, it belongs to the investors, who will turn around and sell the place, keeping the profits. In this case, the $588 investment could turn into $60,000.

“They stand to make the money,” Fair said. “And I won’t have nothing after living here for 20-25 years. I get absolutely nothing.”

Nebraska is one of 12 states allowing this. Fair’s attorneys have a similar case that will be heard by the U.S. Supreme Court this spring.

“The interest rates in these states are already high,” said Josh Polk, attorney with the Pacific Legal Foundation. “In Nebraska, it’s 14%. In Massachusetts, it’s 16%. You already have the carrot to attract private investors to clear the tax liens. You also add a windfall on top of that...it’s just predatory. It’s just legal theft at the end of the day.”

They’re hoping to end the practice, one the Nebraska Supreme Court has said is constitutional.

In Fair’s case, the justices wrote that by offering him to keep the property after three years, the law is about collecting taxes rather than punishing delinquent taxpayers.

“It’s an immoral thing to do,” Fair said.

He says he’s worried if the courts don’t see it his way.

“I’ll be living on the street.”

The Fairs tried to get a bank loan for the $5,300 in new taxes and interest but were unsuccessful. The Pacific Legal Foundation estimates that in the last seven years, Nebraska counties seized and sold about 300 homes. Just in the handful of counties it studied, the estimated home equity lost in Douglas County alone was more than $12 million.

The new round of unpaid liens are online for private investors to buy in Nebraska. There are more than 3,600 properties that could get caught up in this, listed on the treasurer’s website.

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