Updated at 4:11 p.m.
A Boies, Schiller & Flexner litigator is behind a court challenge over how the District of Columbia manages the sale of properties with delinquent taxes. A lawsuit filed yesterday accused city officials of unconstitutionally allowing private investors to foreclose on homes with delinquent taxes, stripping homeowners of equity.
The tax sale system came under new scrutiny after a Washington Post investigation, published earlier this month, explored its effect on vulnerable homeowners. Boies Schiller partner William Isaacson in Washington filed a class action yesterday in U.S. District Court for the District of Columbia claiming the process violated the Fifth Amendment. The proposed class included homeowners who faced foreclosure after the city sold the tax certificates for their properties.
Isaacson, whose practice includes complex commercial litigation, is handling the case pro bono. He and the firm have done pro bono work on tax sale issues with Legal Counsel for the Elderly, a local nonprofit that is pushing for reform but is not involved in the class action. Isaacson also sits on the group's board. In April 2012, Boies Schiller joined a coalition led by Legal Counsel for the Elderly and Crowell & Moring that wrote a letter to city leaders advocating for changes to the tax sale system.
Isaacson said he had been researching the legal theory that the tax sale process was unconstitutional for several years. When he was asked to meet with the conservator for the plaintiff, he said, "we were prepared to move quickly."
When property owners are delinquent on their taxes, investors can bid on those tax certificates. Following a six-month waiting period, the investor has another six months to sue the property owner in District of Columbia Superior Court. The owner can face foreclosure if they don't redeem their property, which involves paying the taxes owed, plus interest and the investor's attorney fees.
The lawsuit claims the city's practice of selling tax certificates for delinquent properties and then allowing the purchaser to foreclose on homes was an unlawful seizure of property under the Fifth Amendment. The named plaintiff, Benjamin Coleman, an elderly veteran, lost his home after failing to pay a $134 property tax bill, according to the complaint. Coleman's story was featured in the Post's investigation.
"Equity in a home is undeniably a property right that may not be taken in violation of the Fifth Amendment of the Constitution," the complaint states.
Attorneys for homeowners launched an effort last year to convince local lawmakers to reform the tax sale system. Advocates said the city wasn't providing enough notification before tax sales and current laws didn't do enough to protect homeowners, especially the elderly or other vulnerable residents. The Washington Post's investigation prompted swift calls for action by Mayor Vincent Gray (D) and the D.C. Council, which is considering emergency legislation.
The mayor's office and the Office of the Chief Financial Officer referred requests for comment to the Office of the Attorney General. A spokesman, Ted Gest, declined to comment.
The case is assigned to U.S. District Judge Emmet Sullivan. No hearings were assigned.