A long-ish opinion from the Alabama Supreme Court in Douglas v. Roper, No. 1200503 (June 24, 2022). But a short post because the good stuff is relatively brief.
Bottom line: property owners have a vested interest in excess money generated from a tax sale of their property, and the Alabama legislature cannot prohibit the owners from claiming that excess equity.
Quick background: the legislature enacted a statute that required property owners who had their properties sold to satisfy tax debts first have redeemed the property before they could claim the excess funds, if any, from the sale. This had the effect of permitting the government in many cases to keep that excess (i.e., the property's equity), as a little something extra -- what our New Orleans friends might call lagniappe. Property owners objected, arguing that retroactively applying the statute would be a taking.
There's a lot to like in the opinion, but here's a few choice items:
- "Alabama also places a strong emphasis on an individual's fundamental right to property." Slip op. at 31.
- "Alabama's strong commitment to an individual's right to property is confirmed by this state's constitution, which states that 'the sole object and only legitimate end of government is to protect the citizen in the enjoyment of life, liberty, and property.'" Slip op. at 32.
- "This state has long recognized a property owner's right to the excess funds generated from a tax sale of his or her property." Id.
- "This Court has also recognized that the excess funds that result from a tax sale are representative of the property itself." Slip op. at 33.
- "Based on the foregoing, we conclude that the right of a property owner to recover excess funds that are generated from a tax sale is a vested right that existed at common law. Property rights are vested rights. The excess funds stand in the place of the property and are representative of the owner's vested ownership interest in the property." Slip op. at 35 (citations omitted).
- "Accordingly, an owner has a vested interest in the excess funds that result from a tax sale. Because an owner has a vested interest in the excess funds resulting from a tax sale, the amendments to § 40-10-28 -- which burden the owner's vested right to the excess funds by imposing upon the owner the often expensive and uncertain requirement of redeeming the property before claiming the excess funds -- cannot be applied retroactively to prevent an owner from claiming the excess funds." Slip op. at 36.
For more on this issue, check out our law firm colleague's recent appearance on Clint Schumacher's Eminent Domain Podcast, "Christina Martin on Home Equity Theft." Christina argued and won the first big case on this issue, Rafaeli, LLC v. Oakland County (from the Michigan Supreme Court, and cited by the Alabama Supreme Court), and is responsible from bringing this issue to light.
Douglas v. Roper, No 1200503 (Ala. June 24, 2022)
