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  • Resources Maine Home Equity Theft Laws
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  • Appendix: The Data
  • Ending Home Equity Theft

Maine

How It Works

Maine cities and towns typically place tax liens on delinquent properties. A lien automatically forecloses after 18 months, conveying full title to the municipality.

 

There are a few exceptions. First, the law sometimes requires municipalities to refund surplus proceeds to seniors who owned homestead property. Second, municipalities may opt for alternative statutory methods to collect delinquent tax debts, including seizing personal property. State law also allows municipalities to adopt an ordinance that reserves surplus funds for former owner.

The Impact

Homeowners caught up in this process lose, on average, 88% of their equity. For the 43 homes in our dataset, homeowners lost a total of $4 million in equity.

Why It Matters

In Maine:

  • 65% of homes were forcibly seized for tax debts less than the price of a 10-year-old Ford F-150.
  • On average, homeowners lost $167,000 in savings beyond the debt owed—or three years’ worth of income.
  • Governments were able to keep $2 million more than what was owed to them.

Lesley Harris and her husband owned and lived in a home in Auburn, Maine. Lesley spent the last years of her husband’s life caring for him as he suffered from severe diabetes. His disease and passing caused Lesley financial stress. Take care of her sick mother in California only added to it.

To deal with the financial hardships, she tried to sell her home but was unsuccessful, even getting an offer for $100,000 that fell through. Retaining the home, Lesley accumulated $32,000 in property tax debt owed to the City of Auburn. Although she made payments where she could, she was ultimately unable to stay on top of the debt. 

In Maine, local governments are authorized to foreclose and sell tax-delinquent properties when the redemption period expires, which happens 18 months after the government files a tax lien. Most U.S. states have similar laws. However, some U.S. states, including Maine, allow the government to keep the surplus proceeds from tax foreclosure sales beyond the amount of taxes owed.

Empowered by this “home equity theft” law, the Auburn government seized Lesley’s home and sold it for $47,000. It did not return the $15,000 surplus to her. The property was likely worth much more than the $47,000 it generated at tax sale. The tax-sale purchaser subsequently sold the property, without improvement, for $130,000. 

Maine has a homestead exemption law that allows homestead owners aged 65 and older to claim the surplus from tax sales if they reside in Maine full time, but Lesley did not qualify.1 Research by Pacific Legal Foundation found that from 2014 to 2021, approximately 43 Maine homeowners were victims of home equity theft. On average, homeowners lost $167,000, or 88%, of their home equity.

Thankfully, Lesley’s neighbors and friends were looking out for her. Her neighbors, John and Gayle Crowley, purchased Lesley’s foreclosed home and then reached out to Pacific Legal Foundation. Concerned about the injustice and sympathetic to Lesley’s situation, they could not understand how the government could sell Lesley’s home and not return the surplus to her.

While governments are entitled to sell homes to recoup delinquent taxes, taking more than they are owed is theft. After tax debts have been repaid, the government should return the surplus to the original owners, regardless of their age or how much of the year they live at the property.

The U.S. Constitution protects homeowners’ rights to just compensation for seized properties and freedom from excessive fines. These laws require Maine localities to return to homeowners the difference between what they owed and what the government took.

1 36 ME Rev Stat § 946-A(2020); 36 ME Rev Stat § 681(2021).

Pacific Legal Foundation is a 501(c)(3) nonprofit organization. © Pacific Legal Foundation, 2022.

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