The governor of Oregon last week signed a bill gutting the government's ability to seize homeowners' surplus equity when it forecloses on a property to collect a tax debt. It's a positive development in a long-running legal saga that has seen governments across the U.S. seize and sell people's homes over modest tax debts—and then keep the profits.
The bill's passage attracted virtually no media attention. But the legislation approved by Gov. Tina Kotek, a Democrat, is among the most robust responses yet to an insidious practice that some states are still finding ways to preserve.
Under Oregon's law, homeowners will receive clearer notice of overdue taxes. If someone is still not able to make those payments and ultimately loses their home to foreclosure, they will receive the leftover equity—after their tax debt has been satisfied—via the state's streamlined abandoned property process. (Local governments typically exert control here, complicating an already-convoluted experience.) But perhaps most important is that the law requires government officials to enlist a real estate agent to sell foreclosed residential properties, helping ensure that owners receive equity that reflects the home's market value.
