In yet another example of what is colloquially known as home equity theft, a 91-year-old Pennsylvania woman has lost her home—and all of its worth—over a small tax debt. But the case just outside of Philadelphia is a particularly vivid illustration of a predatory and gruesome practice that the Supreme Court broadly ruled unconstitutional in 2023.
In 2020, Gloria Gaynor (not the disco queen) forewent her yearly trip to the tax office during COVID-19, recounted Jackie Davis, her daughter, to the local ABC affiliate for its excellent report on the story. Gaynor’s faculties noticeably declined around then, according to Davis. Even still, the Upper Darby resident returned in 2021 to pay her property taxes, her attorney said, under the impression that the pause in enforcement meant the government would apply her money toward the previous year. Instead, it went to 2021, and her debt from 2020 remained intact.
As these things go, it continued to grow. Her $3,500 bill ultimately reached $14,419 with penalties, interest, and fees. The government sold that debt to a real estate firm, the CJD Group, which then acquired the deed to the home.
The rub is that the home is worth over 17 times that. Yet Gaynor—who had nearly paid off the mortgage—will not see a dime in equity, despite that she owed the government $232,000 less than what the home is ultimately worth.
Regular Reason readers may be familiar with Tyler v. Hennepin County, the 2023 Supreme Court case that ruled home equity theft illegal. The plaintiff, 94-year-old Geraldine Tyler, fell behind on her property taxes after some unsettling neighborhood incidents prompted her move from her Minneapolis condominium to a retirement home. She subsequently struggled to pay both her rent and her property taxes. So the local government seized the condo, sold it for $40,000, and kept the $25,000 in excess of her tax debt, which included steep penalties, interest, and fees.
“A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed,” wrote Chief Justice John Roberts. “The taxpayer must render unto Caesar what is Caesar’s, but no more.”
It was a good decision. But Gaynor’s plight highlights one way governments are getting around it: by selling properties for the value of the debt—instead of putting it on the market or selling it at auction—so that there is no excess equity to speak of.
That doesn’t mean, of course, the equity doesn’t exist. It does. It is just now in the hands of a private company, as opposed to the elderly woman who spent the last 25 or so years paying off the mortgage, and nearly finishing.
Gaynor is not even close to being alone here—CJD Group, according to 6abc Philadelphia, has acquired 62 deeds from Delaware County tax sales since 2011 (and it is not the only company doing so).
The issue also isn’t limited to Pennsylvania. Michigan woman Tawanda Hall, for example, owed the government $22,642 in taxes (including penalties, interest, and fees). Oakland County responded by selling her home for the value of her debt to the city of Southfield, which transferred the deed to the Southfield Neighborhood Revitalization Initiative. That city-managed nonprofit then enriched itself when it sold the home for $308,000 and kept the profit. In July, the Michigan Supreme Court ruled that workaround unconstitutional.
Gaynor, for her part, has had no such luck. The Commonwealth Court of Pennsylvania ruled in January that the price at which the home was sold was not “grossly inadequate in comparison to the actual sale price.” The case has, however, drawn the attention of state Rep. Gina Curry (D–Upper Darby), who told the local ABC affiliate that she hopes to make these stories a thing of the past.
She and other interested legislators can possibly look to Oregon, which recently passed a law requiring, among other things, that the government enlist a real estate agent to sell off foreclosed properties, helping ensure that a $247,000 home is not sold for, say, about 94 percent less than what it is worth.
