You Could Lose a $400,000 Home Over a $1,600 Tax Bill

TUCSON, Ariz.—Horses taught Christine Searle the importance of being fair. Intelligent and innately honest creatures, horses know deceit when they see it. She wishes they could teach that principle to the state of Arizona.

The 70-year-old horse trainer and Arizona native is on the verge of losing her life’s savings over an unpaid $1,607.68 property tax bill.

“I owed them the money. And that’s what they should get—the money I owe them,” Ms. Searle told The Epoch Times.

“I don’t think that they should have the right to take all of it.”

Arizona is one of almost a dozen states that allow creditors to keep all the proceeds from sales of homes foreclosed due to unpaid taxes—known as tax lien sales, according to the Pacific Legal Foundation (PLF).

“The taxpayer must render to Caesar what is Caesar’s, but no more,” Chief Justice John Roberts wrote in the unanimous decision.

But, under their current laws, 10 states and the District of Columbia have no means of returning the excess proceeds of a home sale; what Mountain States Legal Foundation lawyers representing Ms. Searle call “home equity theft.” The states include Alabama, Arizona, Colorado, Illinois, Massachusetts, Minnesota, New Jersey, New York, Oregon, and South Dakota.

Ms. Searle hopes her case will be the one to set things right in Arizona.

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In Arizona, a county treasurer can place a lien on a property for taxes owed. These financial claims are then sold at an online auction. In the auction, buyers bid the lowest interest rate they intend to charge property owners to redeem their lien. The bidding begins at 16 percent and the lowest bid wins.

Purchasing a tax lien doesn’t transfer ownership of the property. In Arizona, the property owner has three years to pay the back taxes, which includes fees and interest. If it is not redeemed within that time, the lienholder may foreclose and sell the property.

Unsold tax liens are turned over to the state. The state has the same right to foreclose, but must return any excess proceeds to the former property owner.

In 2005, Ms. Searle bought a three-bedroom, two-bath house as a rental property for $255,000. The house is in Gilbert, Arizona, 22 miles southeast of Phoenix. Its 2024 property tax appraisal came to $376,800, but she stands to lose much more than the taxable value.

Christine Searle gives her horse, Dunny, a treat in Tucson, Ariz., on Feb. 23, 2024. (Michael Clements/The Epoch Times)

Various real estate websites estimate the current market value to sit somewhere between $420,000 and $510,000.

The investment firm Arapaho LLC Tesco purchased the tax lien on Ms. Searle’s property when it bought all of Maricopa County’s 2015 and 2016 tax liens. Arapaho stands to gain a significant profit if it sells the property under current law.

Arapaho’s contact information was not available. An internet search showed that the Phoenix-based company —which is involved in a number of legal actions in Arizona—lists Hamilton Municipal Financing of Altamonte Springs, Florida, as a principal. Hamilton is incorporated in Delaware.

According to PLF, tax liens are popular with banks, investment firms, and other financial institutions because they are seen as relatively secure investments.

This is based on buyers being listed as Incorporated, an LLC, a Trust, or a DBA (Doing Business As).

Retirement Plan Upended

On a dusty ranch near Tucson, Ms. Searle sits on a metal patio chair under a shady tree in front of some stables and talks about her retirement plan.

“I have all my money invested in that home as my retirement instead of putting it in a CD [Certificate of Deposit] or some kind of a bank account. I can make a little money on the side to pay the mortgage and keep, and sell it when I need the money,” she said.

She’s shocked at how close she is to losing her life savings to an investment firm.

For 18 years, she lived in Chandler, Arizona, with her husband and son, Randy Searle. According to Ms. Searle, she led a typically comfortable, suburban middle-class American life. Her then-husband worked for a jewelry and memorabilia company serving high schools and colleges, and she trained horses.

Randy Searle poses in front of his mother’s rental house in Gilbert, Ariz., on Feb. 23, 2024. (Michael Clements/The Epoch Times)

She knew it was possible to lose property over unpaid taxes. But that happened to other people. It wasn’t part of her life or something she really knew very much about.

“I didn’t think about it,” she said.

Then came the divorce, and she had to consider many things she had never given much thought.

She had to find a way to support herself. Her son was grown, so she could afford a simpler lifestyle. Ms. Searle took her divorce settlement and purchased the house in Gilbert to use as a rental to supplement her income.

Her work goes beyond teaching horses to respond to commands. Many horse owners live and work far from the stables in Tucson, so Ms. Searle is their horse’s primary caregiver. She is responsible for arranging veterinary care, farrier services, feeding, and exercising the animals.

“I don’t have a nine-to-five job; I have a 24-hour job. Whenever there’s something wrong, I come down here and work on it, take care of it,” Ms. Searle said. “I’m doing it just because I enjoy it … it’s not like anyone’s making a lot of money here.”

Her son blames himself for his mother’s predicament.

Mr. Randy Searle, as the tenant at the Gilbert house, said it was his job to manage the property. At the same time, he was trying to get a solar energy company in Rhode Island off the ground.

“I had been responsible for paying [the property taxes], and when our company went out of business in Rhode Island, I didn’t have the money to pay them,” Mr. Searle told The Epoch Times.

Mr. Searle said he had worked out a plan with Arapaho to redeem the 2016 lien. However, due to a miscommunication, he didn’t realize foreclosure proceedings had been initiated over the 2015 taxes.

Christine Searle gets her horse’s attention while unwrapping a peppermint candy in Tucson, Arizona on Feb. 23, 2024. (Michael Clements/The Epoch Times)

Soon, he received an eviction notice from Arapaho and American Pride Properties LLC, which had obtained the lien from Arapaho.

Mr. Dale noted that the lienholder, not the county, decides whether to foreclose.

“Please keep in mind that a good portion of this process takes place between the lienholder and the property owner through the legal system,” Mr. Dale wrote in an email to The Epoch Times.

The Buffer Zone

More than 2,600 miles away, in Bolton, Massachusetts, Alan DiPietro is faced with a property tax problem that his lawyer describes as a Catch-22 created by the town.

“The story behind this case, I think, would give Franz Kafka nightmares,” PLF attorney Joshua Polk told The Epoch Times.

Mr. DiPietro sued the town of Bolton, claiming it is using state law to stymie his attempts to pay his property taxes so it can take his land.

“If the town had simply allowed Mr. DiPietro to pay his taxes, they would have their money, and he would have his property,” Mr. Polk said.

“But it seems like they’re more interested in retaining this property than they were in actually getting the money that they were owed.”

On June 20, 2014, Mr. DiPietro paid $160,000 for 34 acres on a wooded hillside with a small pond and a ditch. The property straddles county lines, with 28 acres in Bolton, Worcester County, and six acres in Stow, Middlesex County.

Mr. DiPietro’s lawsuit states that the property value has increased to $370,000.

In 2021 the town of Bolton confiscated the property over $60,000 owed in back taxes.

“This lawsuit alleges that Bolton, acting pursuant to M.G.L. c. 60, violated the U.S. and Massachusetts constitutions and unjustly enriched itself when it took Mr. DiPietro’s Property without paying him just compensation,” the lawsuit reads.

Alan DiPietro talks about the issues he’s having with the Town of Bolton, on his property in Bolton, Mass., on Feb. 26, 2024. (Michael Clements/The Epoch Times)

Mr. DiPietro is an affable man who tells his story with more astonishment than anger. He is incredulous at the roadblocks he says town officials have thrown up to prevent him from paying his taxes.

“It gets ridiculous when they say, ‘Yeah, we took your land. We took your equity. But we didn’t do anything wrong because you can sue us and get it back if you want,’” Mr. DiPietro told The Epoch Times.

“Well, you didn’t have the money to pay your taxes, and you didn’t have the money to hire a lawyer; where are you going to get a half million dollars to sue them in federal court?”

Mr. DiPietro, a mechanical engineer, worked with the team that designed a popular robot vacuum. He grew weary of corporate bureaucracies and micro-management and decided to make a change.

At the time, he had a small alpaca herd that had outgrown his property in Maynard, Massachusetts. He said the property in Bolton was perfect. He knew it would take a huge effort to get the property in shape. He didn’t realize all that his future held.

“This piece, when I was growing up, was an old farm that hadn’t been farmed, so it was getting overgrown. I figured there was going to be some problems with it. But I had no idea,” Mr. DiPietro said.

Shortly after buying the land, Mr. DiPietro and his wife separated and eventually divorced.

His lawsuit describes the divorce as “financially devastating,” ending in bankruptcy.

But, he had a 401k plan that he was able to invest in his fledgling Alpaca farm.

He planned to build a house for his parents and one for himself on the southernmost parcel, at 110 Teele Road in Bolton. He started the permit application process for the houses and set to work making a home for his alpacas. This included building what is described in court documents as “rustic wooden fencing.”

The fence runs northeast along the property’s frontage with Teele Road and is made from branches cut from trees on the property. Thin barbless wire, similar to that used for horse pens, runs through the fence. He also built sheds and other structures he would need to care for the alpacas.

Part of the rustic fence Alan DiPietro built around his property in Bolton, Mass., on Feb. 26, 2024. (Michael Clements/The Epoch Times)

Then, he mowed his grass to make it easier for the alpacas to graze.

“That’s when the towns decided that I was the worst threat to the environment they’ve ever seen,” Mr. DiPietro said.

The Stow and Bolton Conservation Commissions notified him that he may have violated the Massachusetts Wetland Protection Act (WPA). He was ordered to explain how his work complied with the WPA, or return the land to its original condition.

Mr. DiPietro said he learned wetlands require a “buffer zone” in which no work can be done. The pond and ditch on his property were classified as wetlands, as well as other parts of the property. The resulting buffer zones made it impossible to use any part of the property.

“They’re talking about buffer zone on top of buffer zone next to a vegetated wetland, which itself is a buffer zone because it’s not actually a wetland,” Mr. DiPietro said. “They’ve bloated that definition of wetlands so out of proportion it’s utterly ridiculous.”

The towns sued Mr. DiPietro, and the subsequent legal bills further depleted his financial resources. He was now unable to pay his property taxes.

Mr. DiPietro tried growing industrial hemp to raise money to pay the taxes. But his crops were stolen. He then tried to cut and sell timber, but that brought up more environmental concerns.

According to his lawsuit, Mr. DiPietro found emails in which town officials instructed local postmasters to stop delivering his mail. His mailbox on Teele Road has the number 110 painted on it and Mr. DiPietro said he had received mail there.

But, mysteriously, he said his mail delivery stopped at about the same time the towns sued him.

He said the emails revealed that the Bolton town clerk had instructed the postmaster to stop deliveries to his Teele Road mailbox because the city didn’t issue the address.

Mr. DiPietro said he’d already lost the wetlands case by the time he realized the mail had stopped.

“When I went down to find it had been stopped, I’d already missed correspondence from the court. I was defaulted. They won the case on the wetlands because I never even got to present anything,” Mr. DiPietro said.

Mr. DiPietro and his lawyer believe the town has a strong motive for hindering his efforts to pay his taxes.

Alan DiPietro stands near one of the plots on his property on which he grew industrial hemp in Bolton, Mass., on Feb. 26, 2024. (Michael Clements/The Epoch Times)

“Bolton has a financial incentive to foreclose and then keep or sell valuable properties, like the property in this case, rather than help owners avoid foreclosure,” the lawsuit reads.

Property values in the area have increased considerably in the past 10 years according to an interactive map at Homes.com.

The website lists undeveloped land near Mr. DiPietro’s property with an estimated market value of anywhere between $140,000 and $230,000 per acre. Single-family homes in the area have recently sold within days of being listed, the website reports. Most sold in the range of $500,000 to just over $1 million.

A two-bedroom, two-bath, 904 square-foot home on less than half an acre within sight of Mr. DiPietro’s property was recently listed for $426,153.

So, with $370,000 invested in the property and facing a $60,000 tax bill, Mr. DiPietro decided to stop fighting and just sell the lot to pay the taxes. He expected to make about $200,000 on the sale, which would more than cover his bill.

But the town complicated that as well, he claims.

He hadn’t received the permits he’d applied for, so no one would buy the property. Local authorities wouldn’t grant the permits because he had unpaid taxes. Mr. DiPietro said there’s evidence the towns took an active role in blocking the sale.

Mr. Polk said the emails they’ve found show that town officials reportedly discouraged potential buyers. He believes the town is more interested in reaping a windfall than collecting taxes.

“While the town didn’t directly say no sale would be possible, they did say this is a complicated situation and to be wary. And so those buyers were essentially scared off,” Mr. Polk said.

The town offered a payment plan in which Mr. DiPietro would pay an initial $100,000, followed by monthly payments. But the plan had no guarantees.

“And so, for a $200,000 Lot, they’re already telling me, ‘you gotta come up with $100,000 upfront to find out whether the town’s going to give you the permits or not,’” Mr. DiPietro said.

Mr. Polk said state and local officials are aware of the 2022 Supreme Court case, which ruled their practices unconstitutional. But that decision hasn’t had much impact in Massachusetts.

Officials in Arizona and Massachusetts contacted by The Epoch Times would not comment on the record for this story.

Michelle Carlisle, Bolton Town Clerk, wrote in an email to The Epoch Times that she could not comment on active litigation. She directed a reporter to look up Massachusetts’ state law.

The Supreme Court in Washington on Jan. 2, 2024. (Madalina Vasiliu/The Epoch Times)

No Way to Give Back

Mr. Polk said the Supreme Court decision creates a problem for states like Arizona and Massachusetts.

In Tyler v. Hennepin County, Minnesota, the high court ruled that keeping more than the taxes due, after a tax sale, is illegal under the Fifth Amendment.

The Supreme Court has used the same reasoning in subsequent decisions.

The court released unsigned orders on June 5, 2023, summarily reversing two rulings made by the Nebraska state Supreme Court. The justices didn’t explain the orders, which were unanimous.

The Nebraska cases were remanded back to the state Supreme Court “for further consideration in light” of Tyler.

Mr. Polk said it is incumbent upon state legislatures to write legislation necessary to comply with Tyler, which is almost impossible in Massachusetts.

“The way that Massachusetts has responded or not responded to the Tyler case has put municipalities in a difficult situation because existing law doesn’t provide a mechanism by which towns can return excess funds to the original owner,” he said.

But that doesn’t mean everyone is turning a deaf ear.

Massachusetts Attorney General Andrea Joy Campbell issued guidelines for government officials and property owners on how to proceed in the wake of the Supreme Court decision. According to the guidelines, the state’s law is unconstitutional, and no government entity should take any more than the taxes that are due.

“Failure to observe this principle could result in liability for an unconstitutional taking,” the guidelines read.

Ms. Campbell didn’t respond to a request for comment on this story.

The three-paragraph bill states, “Notwithstanding paragraph (a), a taxpayer or his heirs shall be entitled to the surplus from any sale of the property after the deduction of all costs, charges or expenses, taxes and interest owed.”

An American flag flies near new home construction at a housing development in the Phoenix suburb of Queen Creek, Ariz., on June 9, 2023. (Mario Tama/Getty Images)

Ms. Creem didn’t respond to requests for comment.

The state House passed the bill at the end of February and it’s currently in the Senate.

Ms. Griffin didn’t respond to a request for comment on this story.

Everyone Must Pay

Ms. Searle and Mr. DiPietro accept the fact that they must pay taxes.

“I don’t want to pay for the new school, but all right, I’ll concede that maybe I owe it. But you don’t get to take 10 times as much just because I couldn’t pay on time,” Mr. DiPietro said.

PLF attorney Christina Martin said the Tyler case, which she argued, and the Nebraska orders are a preview for states that engage in “home equity theft.”

“These states should be on notice: Change your laws or face millions of dollars in damages in court,” Ms. Martin wrote in a statement provided to The Epoch Times.

Mr. Trachman calls his client an unlikely hero. Ms. Searle doesn’t see herself that way.

She said she has been backed into a corner with nothing left to lose. If she prevails, she will get what is hers, and if she fails, she’s no worse off. The principle is worth the fight, Ms. Searle said.

“I think that people have to have the courage to do what’s right and stand up for what’s right,” she said. “A law that’s wrong, [you] just say, ‘Okay, fine’ and walk away?

“Can’t do that.”

Matthew Vadum contributed to this report.

Original News Source Link – Epoch Times

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