DC to pay out homeowners who lost homes due to tax lien sales

The D.C. government will pay out a $1.3 million settlement to homeowners who lost their homes because of tax lien sales and foreclosures.

Many were elderly and sick and owed only a few hundred dollars in taxes.

The main plaintiff in this case is Bennie Coleman. He owned a Northeast D.C. home for 20 years, and then one day federal marshals kicked him out. He lived on the front porch of the house for five months all because he owed less than $200 in taxes.

"It's basically the constitutional principal of it that's outrageous. That the government could come in and do something legitimate, collect a tax and some things above that, and then take everything," said William Isaacson, with Boies Schiller & Flexner LLP.

Isaacson calls the settlement a happy ending for homeowners who lost their homes through D.C. tax lien sales, but the journey to get there was anything but happy.

"What the law was imposing on them was when you fail to pay your tax, as part of the collection system they were collecting a tax, they were collecting a fee, but they were also taking and keeping all of the home equity," explained Isaacson.

A 2013 Washington Post investigation found about 500 homes were lost through these tax lien sales and foreclosures. That totaled about a third of the people who lost their homes owed less than $1,000 in taxes.

The Legal Counsel for the Elderly also says many were also older and sick.

"In our work to helping them avoid tax sale foreclosure we came to see that the system was terribly unfair so we started talking about trying to fix the system," according to Joanne Savage, with Legal Counsel for the Elderly.

In 2014 the D.C. law was changed and now limits when liens can be sold to investors, and more importantly gives equity back to homeowner after taxes and fees are paid.

The settlement still needs the mayor to sign off on it, but property owners who lost their homes can get up to 65% of the value of their homes. There were about 21 people who were a part of the suit.