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Thousands of Americans have been put in a similar position—losing their homes and other properties over tax debts that only represented a small fraction of the property value.
In most of the country, such a practice is illegal. Local authorities are allowed to foreclose on properties over unpaid taxes, but they are required to sell them and return the owners everything above what they owe.
There are 12 states plus the District of Columbia that allow governments to keep the whole property and all sales proceeds: Maine, Massachusetts, New York, New Jersey, Illinois, Alabama, Minnesota, South Dakota, Nebraska, Colorado, Arizona, and Oregon.
Another nine states have various loopholes, mostly allowing the government to keep such properties for public use (like in Alaska, California, Idaho, Nevada, Ohio, and Rhode Island). Montana allows the government to keep all proceeds from the sale of commercial properties, not residential ones. Texas allows governments to sell properties at a discount in some circumstances. Wisconsin allows governments to keep the properties, but if they sell them, excess proceeds go back to the original owners, according to Pacific Legal Foundation (PLF), a nonprofit that has been tracking and litigating the issue.
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