Unless you're claiming the auction was fixed, how do you get off claiming it doesn't result in fmv? Tax Auctions aren't surprises, they are known to the public, etc.
The market value was impacted by the owner through letting it fall into tax foreclosure. Bidders at auction bid lower that for other homes because they assume there's something wrong with such properties. Bidders generally assume that if there wasn't something wrong with such homes, they would have been sold through normal channels.
The owner, effectively, lowered their own fmv by letting the home fall into tax foreclosure, end of story.
Wow. Can you imagine not doing any of the work to sell your property, not paying your taxes, then telling the government they should give you the full amount of what your property might have sold for if you had actually done the work of selling your own property?
Maybe the takings clause should be limited to the improvement value of the house, since the land is a communal asset being fenced as private property.
This was intriguing and informative thanks for the write up. One thing I didn’t understand can’t it be argued that the act of not paying taxes and effectively abandoning your property for seizure reduces its FMV? There feels to me a distinction between the government acquiring a delinquent property versus one in good standing.
Yes, I think that's a fair point. This ultimately comes down to -- assuming the Court rules in favor of just compensation = FMV -- how far the Court wades into *defining* FMV. I don't have a lot of insight there, but my guess would be "not very far" for reasons like the one you raise. If that's the case, it probably means you wind up more in the realm of appraisals that are required to establish FMV which produces a more defensible figure and maybe accounts for nuance like what you've pointed out, but also closes off the remedy to low-income homeowners who lost their homes, as they're not going to be able to navigate / afford the process to get an appraisal, handle the claim on their own.
Government (and those acting as its proxy) can take what is owed but no more. Regardless of the tax foreclosure mechanism, the taking and retainment of surplus equity is unjust, and constitutionally protected since the inception of the constitution itself.
States, counties, local governments, banks, insurers, and investors will have to pay back what they stole via equity theft, and rightly so. I am the victim of a taking in the hundreds of thousands, and I am standing for my rights.
You are spot on that assessments in Detroit are WILDLY over-inflated. Many of these properties contain structures that must be demolished. How could Wayne County ever afford to pay out 5 figure sums for lots that in reality have a negative value? If Pung v. Isabella County is found in Pung's favor Wayne County will be massively incentivized to get Detroit properties reassessed accurately. What measures could they use to encourage Detroit to do this? There is a lot of potential for things to get ugly if the county tries to coerce the city in whatever ways they can.
The retroactivity for claims that's already been established by the MI Supreme Court means that for the vast majority of the liability (past auctions, which were much larger than present day) it's already too late for reassessment to do anything. The question will come down to how far the Court wades into "what is fair market value?" If the door is left open to assessments as an indication of FMV, though, that's where the real $$$ danger is for Wayne County.
If the property was worth $200k fmv, the owner could have sold it, paid the back taxes, and walked off with a profit. But they didn’t, so they didn’t believe in that fmv either
Not know anything about the case before hand, I would support Pung. Even if we assume the destressed sale is FMV, that would imply the assessed value is artificially high - and the taxes that caused the owner to lose the home were based on that assessment. This also creates a greater incentive for cities to maximize the sale value rather than target the debt, instead of mass sales by auction perhaps.
It seems to me the argument here isn't that Pung is wrong is challenging an unjust system, it is that the system is in fact so bad that retroactively compensating people will push yet more into default.
I have always felt there is a simple solution to property value assessment; home owners report the property value, and cities may then levy taxes at that rate or perform a forced purchase. Under reporting leaves on liable to sell at a loss. I think Pung might need to win for that to be legally viable.
But I have no idea how, practically, any retroactive correction can be made to "underpayments". It does seem it would greatly favour the rich who can argue higher values. Beyond being all together infeasible.
Does Wayne County also sell off tax liens and operate a land bank? Here in Cuyahoga County OH former county treasurer and deputy treasurer Jim Rokakis and Gus Frangos legislated tax lien sales that stripped homes from families that owned their homes outright. Homes were sold to shady outfits like Plymouth Park and Aeon - and most recently our County Executive tried to sell liens again to pay off his bloated deficit.
These same predators operate our county land bank giving insane deals to political pals while allowing HUGE tax foreclosures to go unpunished. Former County Executive Armond Budish's son got away without paying taxes on his bogus LBGT Studio 117 development. The racket is lucrative and no one wants to unravel the truth.
Exactly. It's fundamentally wrong to tax the improvements and undertax the land. Undertaxing the land causes the sale price of land to inflate in speculative value. If the improvements were only worth what it was auctioned for, then no injustice was done. Suing for the speculative gains is wrong.
I don't agree with your logic regarding the unaffordability of fighting for one's rights: lawyers are willing to work on contingency in exactly that situation because they know it can make them money.
Also, it seems like the underlying problem here is assessments that are too high and cause it to be a sensible economic decision to abandon properties.
Unless you're claiming the auction was fixed, how do you get off claiming it doesn't result in fmv? Tax Auctions aren't surprises, they are known to the public, etc.
The market value was impacted by the owner through letting it fall into tax foreclosure. Bidders at auction bid lower that for other homes because they assume there's something wrong with such properties. Bidders generally assume that if there wasn't something wrong with such homes, they would have been sold through normal channels.
The owner, effectively, lowered their own fmv by letting the home fall into tax foreclosure, end of story.
True!
Wow. Can you imagine not doing any of the work to sell your property, not paying your taxes, then telling the government they should give you the full amount of what your property might have sold for if you had actually done the work of selling your own property?
Maybe the takings clause should be limited to the improvement value of the house, since the land is a communal asset being fenced as private property.
If the government says the property is worth X for purpose of taxing it, it's fundamentally wrong for them to pay less than that.
Of course, this raises the whole question of land rent capture by unproductive owners per Henry George...
This was intriguing and informative thanks for the write up. One thing I didn’t understand can’t it be argued that the act of not paying taxes and effectively abandoning your property for seizure reduces its FMV? There feels to me a distinction between the government acquiring a delinquent property versus one in good standing.
Yes, I think that's a fair point. This ultimately comes down to -- assuming the Court rules in favor of just compensation = FMV -- how far the Court wades into *defining* FMV. I don't have a lot of insight there, but my guess would be "not very far" for reasons like the one you raise. If that's the case, it probably means you wind up more in the realm of appraisals that are required to establish FMV which produces a more defensible figure and maybe accounts for nuance like what you've pointed out, but also closes off the remedy to low-income homeowners who lost their homes, as they're not going to be able to navigate / afford the process to get an appraisal, handle the claim on their own.
Government (and those acting as its proxy) can take what is owed but no more. Regardless of the tax foreclosure mechanism, the taking and retainment of surplus equity is unjust, and constitutionally protected since the inception of the constitution itself.
States, counties, local governments, banks, insurers, and investors will have to pay back what they stole via equity theft, and rightly so. I am the victim of a taking in the hundreds of thousands, and I am standing for my rights.
You are spot on that assessments in Detroit are WILDLY over-inflated. Many of these properties contain structures that must be demolished. How could Wayne County ever afford to pay out 5 figure sums for lots that in reality have a negative value? If Pung v. Isabella County is found in Pung's favor Wayne County will be massively incentivized to get Detroit properties reassessed accurately. What measures could they use to encourage Detroit to do this? There is a lot of potential for things to get ugly if the county tries to coerce the city in whatever ways they can.
The retroactivity for claims that's already been established by the MI Supreme Court means that for the vast majority of the liability (past auctions, which were much larger than present day) it's already too late for reassessment to do anything. The question will come down to how far the Court wades into "what is fair market value?" If the door is left open to assessments as an indication of FMV, though, that's where the real $$$ danger is for Wayne County.
They could cut the assessments to match the actual market reality? Radical idea, I know.
If the property was worth $200k fmv, the owner could have sold it, paid the back taxes, and walked off with a profit. But they didn’t, so they didn’t believe in that fmv either
Not know anything about the case before hand, I would support Pung. Even if we assume the destressed sale is FMV, that would imply the assessed value is artificially high - and the taxes that caused the owner to lose the home were based on that assessment. This also creates a greater incentive for cities to maximize the sale value rather than target the debt, instead of mass sales by auction perhaps.
It seems to me the argument here isn't that Pung is wrong is challenging an unjust system, it is that the system is in fact so bad that retroactively compensating people will push yet more into default.
I have always felt there is a simple solution to property value assessment; home owners report the property value, and cities may then levy taxes at that rate or perform a forced purchase. Under reporting leaves on liable to sell at a loss. I think Pung might need to win for that to be legally viable.
But I have no idea how, practically, any retroactive correction can be made to "underpayments". It does seem it would greatly favour the rich who can argue higher values. Beyond being all together infeasible.
Does Wayne County also sell off tax liens and operate a land bank? Here in Cuyahoga County OH former county treasurer and deputy treasurer Jim Rokakis and Gus Frangos legislated tax lien sales that stripped homes from families that owned their homes outright. Homes were sold to shady outfits like Plymouth Park and Aeon - and most recently our County Executive tried to sell liens again to pay off his bloated deficit.
These same predators operate our county land bank giving insane deals to political pals while allowing HUGE tax foreclosures to go unpunished. Former County Executive Armond Budish's son got away without paying taxes on his bogus LBGT Studio 117 development. The racket is lucrative and no one wants to unravel the truth.
Exactly. It's fundamentally wrong to tax the improvements and undertax the land. Undertaxing the land causes the sale price of land to inflate in speculative value. If the improvements were only worth what it was auctioned for, then no injustice was done. Suing for the speculative gains is wrong.
I don't agree with your logic regarding the unaffordability of fighting for one's rights: lawyers are willing to work on contingency in exactly that situation because they know it can make them money.
Also, it seems like the underlying problem here is assessments that are too high and cause it to be a sensible economic decision to abandon properties.