Chemung County no longer allowed to keep proceeds from foreclosed homes after Supreme Court ruling
CHEMUNG COUNTY, N.Y. (WENY) -- Chemung County has been in a limbo with New York State after the Supreme Court ruled counties are no longer allowed to keep proceeds from auctions on foreclosed homes that created surplus revenue.
In May of 2023, a Minnesota case was brought to the Supreme Court after Geraldine Tyler, a woman who owned a condominium, stopped paying property taxes, was given a foreclosure notice after she accrued $15,000 in unpaid taxes, and later had her home foreclosed by Hennepin County. In turn, the county sold the property for $40,000 and was able to keep a surplus of $25,000, while Tyler was left with nothing.
The question at the forefront is if it is constitutional for the government to foreclose a home to satisfy a debt, and pocket leftover revenue.
The Minnesota ruling is now telling New York, among other states, that counties are no longer able to keep proceeds from auctions. Newly sworn in treasurer of Chemung County, Katlyn Colombani-Ruiz, says the county practices Article 9 of Real Property Tax Law for Levy and Collection of Taxes, and Article 11 that outlines procedures for enforcement of collection of delinquent taxes. Once unpaid taxes are turned over as delinquent, the county is then required under law to make each taxing district whole.
“What Article 9 is where we're issuing tax bills to all owners throughout the county and when they don't pay those tax bills, what happens is those bills then become delinquent when they become delinquent, Article 11 then is prescribed, and we have to follow a foreclosure mechanism.”
The most recent live auction in the county began on Oct. 31st and ended Nov. 14th of 2023 with 29 homes listed that allowed for people to bid on. Colombani-Ruiz says all gains made from the auction are being held in a trust until a clear direction is issued by the state.
The ruling could be considered good news for former homeowners that have been seeking legal representation to claim back any surplus funds taken from their designated county, however for local governments it’s become a waiting game until their state amends the law. For the treasurer office of Chemung County, Colombani-Ruiz says she does not have the authority to just “hand back money to homeowners.”
“There has to be a legal process involved for a treasurer for any entity to give back proceeds, if you will. The issue right now is that we don't have either the state telling [us] you are supposed to distribute those proceeds to either homeowner, mortgage holders or any lien holders.”
Colombani-Ruiz says typically when the delinquent taxes are turned over to the treasurer's office, that money is allocated to each town, village, and even school districts.
At this time, the county is hearing to wait from New York State on how to move forward and will inform the public on any further developments.