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The Number of Black Homeowners Whose Property Is Lost to Tax Liens Is Startling. Here’s Why It Happens.

In 1884, Caesar Scott purchased 40 acres of a plantation from a former Union Army soldier. The land was located on St. Helena’s Island, a Sea Island in South Carolina. Scott and his family toiled the land and it was ultimately passed on to his granddaughter, Evelina Jenkins. Today, none of Scott’s ancestors are reaping the benefits of this land. Instead, they look at the land — now broken into subdivisions of homes — with sadness. Now known as Horse Island and a smaller island, Little Horse, the descendants of Scott share an often-told story of how it was all lost: tax lien sales. 

Photo by Kindel Media: https://www.pexels.com/photo/couple-standing-in-front-of-their-house-7579042/

Tax liens are placed on properties when an owner needs to delinquent taxes. When a tax lien is sold, it allows the purchaser to be repaid by the property owner — it is not initially ownership of the property. However, for many Black American families — throughout the Jim Crow Era and beyond — unscrupulous investors used various tactics to convert their tax lien purchase into actually owning the property. 

That’s what happened to Scott’s 40 acres. Sometime in the 1960s, Scott’s granddaughter, Evelina Jenkins discovered that she was no longer the owner of the land when she went to pay her annual property taxes to a lawyer. At this meeting, the attorney, William Levin, informed Jenkins that he’d purchased the property through a tax lien sale in 1932. Levin sold the land to a white family in 1961. This family wanted to develop subdivisions and Jenkins’ family would have to move. The payments that Jenkins had been making to Levin for so many years were not actually annual tax payments–it was for renting the land. 

“She came back just distraught, so upset,” Delphine Gillard, Jenkins’s granddaughter, told Bloomberg. “It crushed her.”

Levin’s actions were an early version of the tax lien sale. He became the owner of the land by repaying the delinquent taxes and additional fees on Jenkins’ land. While the family had a year to repay Levin, they were never even informed that they were no longer owners of the land and as a result, they took no initiative to  regain ownership. 

A Tradition of Deceit

Jenkins was not the only Black American to lose their property in this manner. Levin was not the only white person in a position of power to take advantage of Black landowners who did not understand the concept of a tax lien sale. 

It was a common practice for Black property owners to use a white middleman to pay property taxes. 

“People were doing stuff who had access to the Black population, because the Black population trusted them,” Joe McDomick Jr., a retired Black judge who worked for years to save St. Helena’s Black-owned land from tax sales told Bloomberg. “There were some Black folks back in the day who didn’t feel safe going to the courthouse to pay their taxes. They thought it was not necessary if they could have a white person do it for them. It could be anybody. It could be an insurance person. We had white people going door to door collecting insurance, and people would give them their tax money.”

Attorney Jillian Hishaw recently published “Systemic Land Theft,” a book documenting how white Americans stole properties owned by Black and Indigenous people. As an agricultural attorney, Hishaw has been an advocate for Black American farmers who have lost their land as a result of tax lien sales. Her desire to support and advocate for Black farmers is a result of her own family’s experience — her grandfather lost his farm after an attorney they hired stole their money. The property was sold through a tax lien without any notice given to her family. 

Tax Liens Are A Business 

Tax liens are currently sold in 30 states with investors purchasing $3 billion to $5 billion annually. For investors, the real profit is in the fees associated with repaying the taxes and interest that they will gain. 

Local governments benefit greatly from selling tax liens as it supports funding various services and are not supposed to result in owners losing their properties. According to the National Tax Lien Association, very few liens currently end with an owner losing their property. An estimated 70 percenr of land resulting in a tax lien sale is already vacant, Brad Westover, executive director of the organization told Bloomberg.  

“Most of the hedge funds and people who are in this space recognize that this is simply an arbitrage business,” Westover told Bloomberg. Investors “do not know anything about the demographics of the delinquent taxpayer.”

However, the disproportionate number of Black property owners whose land is sold at tax lien sales and later lose their land is startling. 

Today, in towns throughout Ohio, for example, Black American communities are disproportionately losing their homes as a result of tax lien sales. As a result, these communities suffer from abandoned property and the impact of urban blight. 

A 1973 study conducted by the Department of Housing and Urban Development revealed that Black neighborhoods in 10 cities throughout the United States had disproportionately high tax rates. Over 40 years later, not much has changed. A 2020 report from the Federal Reserve Bank of Minneapolis discovered that Black and Latino homeowners paid 10 percent to 13 percent more in property taxes than their white counterparts possessing similar market value. 

And as some property owners are still recovering from the COVID-19 pandemic and the loss of income, tax lien sales are climbing in places like St. Helena and other Sea Islands. Between 2019 and 2020, 136 properties were sold at a tax lien sale. As a result of donors and an extension from the state’s supreme court, 113 properties were given back to their original owners.

In South Carolina, property owners have up to one year to repurchase their property at the price the investor paid as well as 12 interest. While the interest rate is lower than in other parts of the United States, the competition to purchase property in the coastal areas can drive up the price of a property — making it unavailable to its previous owners — similar to Jenkins’ story. 

“Clear evidence of that can be seen just driving through communities here in Beaufort County, where a sea of neon green signs have been posted on houses, gates, fences, and trees announcing that the property they’re on has been seized,” Theresa White of the Pan-African Family Empowerment & Land Preservation Network Inc. told Bloomberg. “[It] is a scandalous state-sanctioned land grab of poor, unemployed, and Black people’s land by rich investors and developers from across the United States.”

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