Jan 25, 2024 | AOC Advocacy, AOC News, Governance, Revenue, & Economic Development
Among AOC’s priorities for 2024 is a bill to be known as HB 4056 that will create an orderly process to get refunds to property owners in cases where a foreclosure sale generates proceeds that exceed the property’s tax debt, penalties, and costs related to foreclosing. The bill solves logistical problems counties face in the wake of Tyler v. Hennepin County, a recent U.S. Supreme Court decision that invalidated Oregon law dictating how counties handle such cases.
Most Oregonians are unfamiliar with the foreclosure process, and it has been years since the legislature made major changes to laws governing the process. Getting a bill about such a complicated topic over the finish line in a short session will be a heavy lift. For HB 4056 to win passage, dozens of legislators will need to have a solid understanding of how foreclosure works in Oregon and counties’ responsibilities surrounding it.
AOC was happy to secure time at the joint meeting of the Interim House and Senate Judiciary Committees on Jan. 12, to boost lawmakers’ understanding of the foreclosure process. AOC arranged for county subject-matter experts to present to lawmakers about what state law requires counties to do when people fail to pay their property tax on time, who tends to get caught up in foreclosure proceedings and why, what sorts of property tends to be involved, and the many ways counties work toward positive outcomes under sometimes very difficult circumstances. Marion County Assistant Legal Counsel Scott Norris, Josephine County Assistant Legal Counsel Stephanie Nuttall, Lane County Assistant County Counsel Emily Vario, Lane County Property Manager Kellie Hancock, and Deschutes County Property Manager Kristie Bollinger presented at the meeting and answered questions from lawmakers.
Their presentation is available for download here, and a video of the meeting can be viewed here (the presentation begins at the 48 minute mark).
January “Legislative Days” (Jan. 10-12) was the last opportunity to communicate with lawmakers on-the-record before Oregon’s “short” legislative session begins on Feb. 5, setting off a mad dash to move legislation before the final gavel falls a few short weeks later (March 10, at the latest).
While many of the bills to be introduced are still under wraps, some are starting to trickle out. AOC legislative staff have been furiously preparing for the sprint ahead, working to pin down details of lawmakers’ plans, and doing our best to ensure AOC priority legislation is in the best possible position to find favor with lawmakers.
Contributed by: Michael Burdick | AOC legislative affairs manager
Oct 31, 2023 | AOC Advocacy
On Oct. 12, 2023, three people who lost their homes to foreclosure over unpaid property taxes filed a lawsuit against the counties that foreclosed on them in the U.S. District Court for the District of Oregon. The lawsuit demands refunds of any proceeds of foreclosure sales that exceeded plaintiffs’ debts to Lane, Multnomah, and Yamhill counties, and pertains to sales that took place as far back as May 25, 2017. It seeks to be recognized as a class action on behalf of all similarly situated former homeowners. Counties have been anticipating lawsuits like this one ever since news broke of the U.S. Supreme Court decision, Tyler v. Hennepin County.
On May 25, 2023, the high court ruled that a 94-year-old woman should have received a refund from Hennepin County, Minnesota after they foreclosed on her condo over $17,300 in unpaid property tax, interest, and penalties, and sold it for $40,000. Minnesota is among 14 states, including Oregon, where the foreclosure process provides for the delinquent property being forfeited in its entirety. Under Oregon law, counties retained the proceeds of foreclosure sales, even if the proceeds exceed the taxes, interest, and penalties that were owed. The State of Oregon had filed a “friend of the court” brief in the case, defending Hennepin County against the suit. The ruling held that such processes violate the Takings Clause of the Fifth Amendment to the U.S. Constitution.
AOC expects that soon every county in Oregon will be targeted by similar lawsuits over foreclosure sales, including sales that may have taken place many years ago. Preliminary discussions with CIS, who provides insurance to most Oregon counties, indicate that none of these losses are likely to be covered by insurance. Considering how tight county budgets are, fears are growing over how counties can possibly afford obligations associated with the lawsuits without making catastrophic cuts to critical services such as libraries, policing, and public health programs, or even going bankrupt. AOC is working with counties now to develop an estimate of county legal liability statewide, and are seeking state funding to assist counties with these costs.
Counties in many other states have already seen similar lawsuits. Last year, Oakland County, Michigan settled a similar case for $38 million, and this spring, forty-three other Michigan counties agreed to settle a similar lawsuit, in an agreement estimated to cost tens of millions of dollars.
Getting state help with these costs was identified by AOC membership as our top priority for the 2024 legislative session in the governance and revenue portfolio, along with limiting liability around future foreclosure sales surpluses and establishing new statewide guidelines for how to handle foreclosures. Most states have laws setting reasonable time limits for filing a claim over foreclosure surpluses, which helps counties avoid surprise claims impacting already-budgeted funds – Oregon does not.
There are some steps counties can take by themselves to limit liability associated with future foreclosure sales, but for every one of Oregon’s 36 counties to develop and enact their own ordinance will be a costly exercise, and having a patchwork of varying approaches across Oregon doesn’t make any sense.
At their September meeting, the AOC Governance and Revenue Steering Committee convened a workgroup to develop a legislative proposal for 2024 that addresses these issues. A group of about a dozen county staff who have legal or property management expertise met on Sept. 18, with Marion County Assistant Legal Counsel Scott Norris leading the group in efforts to craft a draft proposal. AOC is working hard to secure introduction of the proposal as a bill for consideration in the 2024 legislative session.
Contributed by: Michael Burdick | AOC legislative affairs manager
