The legal battle of the old man who lost his house because he was owed $8 in taxes

In 2011, Mr. Rafaeli, a retired engineer, bought a 140 m2 house in Oakland County with the intention of renting it out to get money to cover his retirement.

Mr. Rafaeli said he thought he had paid all the property taxes on time, but only 5 months later, he suddenly received a notice that he was owed nearly 500 USD.

Even though he only owed taxes in 2011, the Oakland County government in February 2014 still foreclosed on his $60,000 house to recover the small tax amount, along with $277 in penalties and interest.

Under the Michigan Common Property Tax Law, the head of the county finance department has great authority when dealing with tax debt, including speeding up the property foreclosure process.

In most other states, after the property is auctioned, if the proceeds exceed the taxes owed, the difference is refunded to the original owner.

Rafaeli’s situation is not rare because tens of thousands of other properties in the city of Detroit also encounter the same situation, according to Forbes.

Disagreeing with the current regulations, Mr. Rafaeli and another plaintiff initially sued at the federal trial court in the Eastern District of Michigan thanks to free legal assistance from lawyers.

Mr. Uri Rafaeli sued because his entire house was confiscated and he did not receive compensation.

In 2015, Mr. Rafaeli returned to sue in state court.

In opposition, the Oakland County representative argued that adequate notice had been sent to the two plaintiffs in accordance with the correct procedure, according to the Common Property Tax Law.

Both the first instance and appellate courts ruled in favor of the Oakland County government.

In 2019, the case was appealed to the Michigan state supreme court.

Contrary to the wishes of the Oakland County government, the Michigan Supreme Court ruled in favor of Mr. Rafaeli on July 17.

Furthermore, according to the Supreme Court, the principle `the state cannot take more assets than the amount owed` is a principle throughout the Michigan judicial system and has deep roots in Common Law.

The Michigan Supreme Court declared that Oakland County’s move to hold the proceeds of an auction amounted to confiscation of legally owned property without adequate compensation.

After the verdict, the case file was returned to the Oakland County trial court for processing, ending Mr. Rafaeli’s 6-year legal battle.

Yair Andegeko, Mr. Rafaeli’s son-in-law, said his father worked all his life to reach the point where he could retire with the accumulated money.