LINCOLN, NE – In a historic about-face, the Nebraska Supreme Court determined that two elderly homeowners whose property was taken because they owed back real estate taxes are entitled to just compensation under the Takings Clause of the United States and Nebraska Constitutions.
Legal Aid of Nebraska represented two different elderly homeowners in their state court claims that the tax sale process was unconstitutional and took each case to the Nebraska Supreme Court.
The first case involves an elderly couple, Kevin and Terry Fair, who have lived in their Scottsbluff home for nearly three decades. After Terry Fair, who sadly passed away during the case, was diagnosed with Multiple Sclerosis and could no longer work at Walmart, Kevin Fair stopped working to take care of her and the couple was left with a limited income. When the Fairs fell behind on their property taxes, the county transferred the couple’s $60,000 home to a private investor. The investor paid off the Fairs’ $5,268.00 debt to the county and would stand to pocket the equity, the property’s value beyond the tax debt, as profit.
The second case involves Sandra Nieveen, an elderly woman who lived in her Lincoln home for nearly fifty years when the county transferred her $61,900 home to a private investor for a tax debt of less than $4,000. In both cases, the Nebraska Supreme Court upheld the laws.
After the unfavorable rulings, Pacific Legal Foundation asked the United States Supreme Court to review both cases, with Legal Aid of Nebraska joining as local counsel. Last May, the United States Supreme Court ruled in another PLF case — Tyler v. Hennepin County — that if the government takes more than what is owed to satisfy a property tax debt, it violates the Fifth Amendment’s Takings Clause. After the Supreme Court decided Tyler, it granted Kevin’s and Sandra’s petitions and sent their cases back to the Nebraska Supreme Court to reconsider their claims in light of Tyler.
“The Court’s ruling today solidifies that pursuant to the Takings Clause of the United States and Nebraska Constitutions, just compensation must be paid to homeowners when the value of their property taken to satisfy the tax debt is worth more than what is owed,” said Jennifer Gaughan, Legal Aid’s Chief of Legal Strategy. “These tax sale laws harm the elderly, sick, and poor the most, with a disproportionate impact on people of color. Homeownership is one of the ways people can accumulate wealth and low-income people, like Kevin and Sandy, would have lost their homes and stripped them of what little wealth they have acquired in it if the process was allowed to stand.”
“We are thrilled that after years of litigation, Nebraska finally recognizes Kevin Fair’s and Sandra Nieveen’s right to their hard-earned equity,” said Christina Martin, senior attorney at Pacific Legal Foundation. “This is a win for all Nebraskans, who can now sleep soundly knowing their home equity belongs to them and to them alone.”
Nebraska’s tax sale laws challenged in Fair and Nieveen changed in September of 2023. LB 727 stopped home equity theft, requiring tax lien investors to pay the original owners whatever equity remains after payment of the delinquent taxes, interest, penalties, fees and any other liens on the property.
Caitlin Cedfeldt, an attorney with Legal Aid’s Housing Justice Project said, “Our clients have been living for years under the stress of potential homelessness and suffering the loss of equity in their property. Today’s ruling provides a clear path for our clients to obtain justice.”
