Friday, March 23, 2012

Oregon Tax Foreclosure Law That Resulted In Entire Loss Of Home Equity For Elderly Siblings Eliminated From The Books

In Eugene, Oregon, The Register Guard reports:
  • No one is sure how the state law that required the city of Eugene in 1994 to sell John and Betty Neely’s $65,000 Santa Clara house for no more than the $7,411 the Neelys owed on an improvement lien got on the books.

  • But it did. And, despite the repeated efforts of Vida resident Scott Rohter to change it in the nearly two decades since the high-profile Neely dispute, the law stayed in place until this year.

  • It’s hard to imagine what (lawmakers) were thinking of,” said Dave Hunnicutt, president of Oregonians in Action — an advocacy group that lobbies for property owners’ rights — when the Legislature long ago required that cities, when foreclosing on a property to cover an improvement lien, could not sell that property for a penny more than the amount of the lien. That meant that those rare homeowners who were foreclosed on for failing to pay improvement liens would lose all their equity.

  • This year, however, Rohter — helped by Hunnicutt and state lawmakers Rep. Jim Weidner, a Yamhill Republican, and Sen. Floyd Prozanski, a Eugene Democrat — secured unanimous approval in the Legislature for House Bill 4111, which addresses the issue. Gov. John Kitzhaber signed the bill into law last week.

  • HB 4111 requires local governments to sell such property for at least 75 percent of its assessed value, and that any money left over after the lien is paid goes back to the home­owner.

  • The long-drawn-out Santa Clara dispute, and the bitter outcome for the Neelys, has long galled Rohter, a Lane County appliance repairman. Siblings John and Betty Neely, who were 76 and 65 at the time, got nothing when they were evicted from their home in 1994 after refusing, for years, to pay their share of a Eugene-mandated sanitary sewer improvement in their Santa Clara neighborhood. The Neelys initially owed $5,000 for the sewer line, which grew to $7,411 as they stalled and the city tacked on fees.

  • At the time, many Santa Clara residents were reluctant to be absorbed into Eugene. Many preferred remaining in county jurisdiction, hooked up to wells and septic systems. “It was a rural setting at the time,” Betty Neely, now 83 and living in Cupertino, Calif., said in a recent interview. “People there wanted to live out of the city.”

  • Santa Clara residents never had a chance to vote on whether they wanted the new sewer lines, Betty Neely remembers bitterly to this day. “We didn’t get a vote,” she said. “That’s very important in this America.”


  • The Neelys moved in with neighbors, and John Neely died later that year. Courtroom battles over the legality of imposing the sewer improvements without a public vote continued for several years. “It took a lot out of both of us,” Betty Neely said. “It was dirty business. I will always think so.”

  • The property was purchased in a foreclosure sale by Leroy Bench and Marilyn Goss for $7,411 in 1994. Under state foreclosure sale law, the city had to put the property up for sale for the amount owed on it. Five years later, the new owners sold the property for $100,650, county property records show.

For more, see Bizarre Oregon foreclosure law finally off the books (The law was at the center of a dispute that led to the sale of a foreclosed home for $7,411 — the amount of a sewer lien — in 1994).