In a decision that was expected in light of a U.S. Supreme Court ruling last year, the Nebraska Supreme Court on Friday ruled that homeowners from Lincoln and Scottsbluff are entitled to receive the equity in their homes after they were sold to satisfy tax liens.
The decision requires that Sandra Nieveen and Kevin Fair be compensated for the extra equity taken from them when their homes’ tax liens were bought by investment companies. Lancaster and Scotts Bluff counties gave the investors the deeds to Nieveen’s and Fair’s houses, each worth about $60,000, leaving the homeowners with nothing.
Fair owed $5,268 in unpaid taxes, fees and interest, while Nieveen owed $3,796.
The two were entitled to receive the excess equity in their homes thanks to the May 2023 U.S. Supreme Court ruling in Tyler v. Hennepin County.
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In that case, the court ruled that Hennepin County, Minnesota’s, seizure of a woman’s condo worth $40,000 to satisfy a $15,000 tax debt violated the Takings Clause in the Constitution’s Fifth Amendment, which says private property shall not be taken for public use without just compensation.
But that ruling still left the question in the two Nebraska cases: who is responsible for reimbursing the homeowners for their lost equity.
“The investor says the county is liable. The county says the state is liable. And the state says the investor is liable,” attorney Christina Martin of the Pacific Legal Foundation — a public interest legal organization that fights for property rights — said during the Nebraska Supreme Court hearing on the issue in February.
In Friday’s ruling, a majority of the justices found that Continental, the company that purchased the tax lien on Fair’s property, was liable.
Similarly they also found that Tax 106 and Vintage Management, LLC, the limited liability companies that bought the tax lien on Nieveen’s property, were liable and deprived Nieveen of her equity in the property.
Both Scotts Bluff and Lancaster counties followed the law and helped provide Continental and Tax 106 and Vintage Management with the tax deed to Nieveen’s and Fair’s properties, but they received no windfall in the transaction, the court ruled.
“This is a win for all Nebraskans, who can now sleep soundly knowing their home equity belongs to them and to them alone,” Martin said in a press release about the decision.
Nebraska Supreme Court Justice Jonathan Papik agreed that Fair and Nieveen had a protected property interest and, in turn, had a rightful claim to just compensation.
But he dissented on who should be liable.
“My view is that Scotts Bluff County would be liable to pay just compensation,” Papik wrote in his dissent on Fair’s case.
Papik cited the fact that Continental purchased the tax lien from the county, and as a result of purchasing that tax certificate, Continental also purchased the right — if Fair failed to pay off existing debts — to request a tax deed and obtain the property free and clear.
Once Fair failed to redeem the property, Continental requested a tax deed. In turn, the county treasurer gave a “deed of conveyance” for the property to Continental.
“I understand the county, in this case, to have used the toehold of a tax debt to confiscate the entirety of Fair’s interests in his property,” Papik said.
Similarly, in Nieveen’s case, Papik believed Lancaster County should be held liable instead of Tax 106 and Vintage Management for the same reasons. He was joined in his dissent by Justice Lindsey Miller-Lerman, who did not participate in the Fair ruling.
Reach the writer at 402-473-7254 or avargas@journalstar.com.
On Twitter @Alex_Vargas1994
