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  • Resources South Dakota Home Equity Theft Laws
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  • Appendix: The Data

South Dakota

How It Works

South Dakota counties can choose to sell or keep tax liens on delinquent properties. Three years after a tax lien certificate is sold, the lienholder may then apply for a tax deed, which grants absolute title to the lienholder. The property owner has the right to redeem until the tax deed is issued. Because the tax deed grants absolute title to the lienholder, the lienholder keeps any profits from any subsequent sale.

 

An exception to home equity theft occurs when a county chooses to reconvey a property to the former owner by quitclaim deed for the total amount that was owed, including all taxes, interest, and costs. But it is important to note that the government has no obligation to make such a reconveyance. 

The Impact

Data collection is still in progress.

Why It Matters

When homeowners fall behind on their property taxes, South Dakota allows county treasurers to sell tax liens to private investors. Investors can sell a home after three years if the debt and accumulated interest and fees have not been paid. Investors keep all profits from a sale, while homeowners lose all the equity built in their home, regardless of how small their tax debt was at the time of sale.Tax-delinquent South Dakota homeowners have three years after the tax certificate sale to redeem their property. Once the redemption period expires, the private investors (lienholders) can apply for a tax deed to the property, which grants them absolute title. The tax deed allows the lienholder to keep the property or any profits from a future sale. Former owners lose not only their property but also any equity they had in it. In other words, they’re left with nothing.

Counties can choose to sell the property back to the previous owner for the total accumulated taxes, interest, and penalty fees. However, counties have no obligation to do so.

Approximately half of South Dakota’s counties sell tax liens that enable private investors to take everything from delinquent homeowners. These counties include Pennington and Minnehaha.

Until recently, North Dakota also allowed local governments to engage in home equity theft. But in 2021, North Dakota legislators took a huge step forward in protecting homeowners’ property rights by passing a law that ended the practice in the state.

According to the Fifth Amendment of the U.S. Constitution, the government cannot take private property without paying just compensation. Home equity theft is unfair and unconstitutional. South Dakota should follow in North Dakota’s footsteps and end home equity theft now.

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