Board To Consider Treasurer’s Call To End Tax Sales Without Equity Return

Over the last fifteen years, hundreds of landowners who have lost their property in tax lien sales in San Bernardino County have seen the equity they accrued through those now-defunct ownerships vanish in what some have characterized as seizures tantamount to wholesale theft either carried out or overseen by government officials.
The Fifth Amendment to the U.S. Constitution requires that anyone being tried for a capital crime first be indicted, prevents anyone once exonerated of a crime from being tried again, guarantees due process to everyone being subjected to the government’s system of justice and prohibits the government from compelling anyone to testify against himself. The Fifth Amendment offers American citizens further assurance that no “private property [can] be taken for public use, without just compensation.”
As in other states, California provides in its laws that taxes can be imposed upon its citizens. With regard to property tax, the taxing authority codified in California’s statutes allows government authorities to seize the property of those in arrears on their property tax for five years or more and to sell that property and use the proceeds to cover the unpaid taxes owed, late penalties on that owed tax and the incidental costs of conducting the sale of the property, which entails the holding of an auction in which the property goes to the person making the highest bid. California law is less than explicit as to what is to be done with the proceeds of such a sale in excess of the delinquent taxes, penalties/fines and sale costs. Among a large segment of the state’s citizenry, it has long been presumed that the Fifth Amendment provision preventing private property being taken for public use without just compensation applies when such tax lien sales take place. Nevertheless, California law relating to tax lien sales contains a chapter allowing the bypassing of the requirement that the amount of money obtained in a tax sale of a property above what is needed to pay the delinquent taxes must be returned to the original landowner.
The subject of tax lien seizures of property and their subsequent sales process to satisfy tax delinquencies is contained in chapters 7 and 8 of the California Revenue and Tax Code.
Chapter 7 delineates a precise process by which properties that have more than five years of tax delinquencies are subject to seizure by the county and are to be prepared for a sale to the highest bidder for the purpose of satisfying the payment of the property owner’s past due taxes. Under that process, a property owner losing his house or land is, at least theoretically, entitled to all proceeds from the auction sale that exceed taxes/penalties due plus costs.
Chapter 8, however, is entirely mute with regard to requirements that the constitutional rights of a homeowner who is delinquent on his or her property taxes be protected. In San Bernardino County, as well as in some other California counties, this latitude in the law has resulted in the constitutional protections that are supposed to be in place for property owners being ignored when entities such as public agencies seek to obtain property for operational purposes or land trusts and affordable housing nonprofits utilize the authority provided to them in Chapter 8 to pull certain desirable properties from the auction process to reserve those properties for “special public purposes.” Those purposes, ostensibly, are intended to assist a nonprofit organization rehabilitate the property in order to sell or rent it to, or otherwise use it to serve, low-income persons. In the case of vacant property, nonprofit organizations can use Chapter 8 to dedicate the land to conservation, to public use or to construct residential dwellings on the property and sell or rent them to low-income persons.
When a property doesn’t sell, it’s reoffered in a secondary tax sale with lower thresholds. If it still doesn’t sell, it’s added to the tax sale the following year. As long as the property stays in the Chapter 7 process, its erstwhile owner stands the prospect of recovering, within a fair and Constitutional framework, some or all of the equity he or she accrued in the property. When Chapter 8 is applied, however, the landowner sees the land he or she once owned entirely subsumed by the nonprofit that claims it.
The county tax collector, in the face of a public entity or nonprofit organization requesting under the provisions of Chapter 8 of the Revenue & Tax Code to remove a property from the tax sale auction process, is obligated by law to go along with that request. The board of supervisors typically then enters into an agreement for the purchaser to buy the property for only the tax due and a processing fee, at a price that current San Bernardino County Treasurer-Tax Collector/Auditor-Controller Ensen Mason said amounts to “pennies on the dollar.”
Mason characterized what is going on as an abuse of the governmental process and the authority of the board of supervisors.
“The property owners get nothing for the value of their equity,” Mason said. “Chapter 8 allows county boards of supervisors to confiscate real estate from property owners with zero compensation. Counties up and down the state have been taking advantage of this law to steal tons of real estate.”
Mason said, “What is done with this property falls into a few categories. In our county, the primary beneficiaries have been two land trusts. They acquire the land and lock it up so nobody can use it for anything. In other counties, there has been fraud and abusive profit taking. Three purchases being attempted in our county fall into this category.”
According to Mason, a common ostensible but often false rationale for engaging in the property diversions relates to “affordable housing.”
The Sentinel has identified Wright Housing Corporation and Cross-Roads Housing as two of the entities that have been engaged in picking up the properties at prices far below their value.
The Wright Housing Corporation is a 501(c)(3) nonprofit organization founded in 2019 and dedicated to low-income housing assistance involved in housing development, construction and management.
Kenneath Joseph Letourneau, a real estate agent based in Bellflower, is the principal in the Wright Housing Corporation, the company’s founder, chief executive officer and sole board member. Letourneau runs the Wright Housing Corporation out of a post office box within a United Parcel Service Store in Suite 107 at 13536 Lakewood Boulevard in Bellflower. Letourneau, using the variant spelling of his first name as Kenneth, is an agent with Berkshire Hathaway Home Services California Properties, located at 16911 Bellflower Boulevard in Bellflower. The Wright Housing and Bellflower Berkshire Hathaway offices are within the 90706 Zip Code.
The Wright Housing Corporation is scheduled on Tuesday, April 12, to obtain through a tax lien sale a home in Yucca Valley for $24,300; a home in Twentynine Palms for $11,400; and a home in Hesperia for $61,800.
Cross-Roads Housing has been in existence since 1997. It bills itself as a faith-based organization on a “mission to help families with healthy food, gang resistance and youth mentoring programs,” and is involved in housing development, construction and management that “builds, rehabilitates, manages and/or provides rental housing for low-income individuals and families, older adults and people with disabilities and which makes purchasable housing available to low or moderate income families by offering lower priced housing and/or affordable payments plans, by arranging for interest or mortgage subsidies or by involving eventual owners in the construction process, including sweat equity.”
The principals in Cross-Roads Housing are Gregg Bynum and Shannon Bynum, who made $192,000 and $38,000 respectively in 2019, but did not file a tax return. They have claimed zero revenue and assets for Cross-Roads Housing. There are three addresses for Cross-Roads Housing on record, one being 5133 Santa Ana Street in Cudahy, CA 90201, the other 2006 East 103rd Street in Los Angeles, CA 90002; and 2434 East 124th Street in Compton, CA 90222. The Cudahy address is an apartment complex.
Cross-Roads Housing recently acquired a three-acre property in Apple Valley for $2,350 through a tax lien purchase.
San Bernardino County has been able to bypass the requirement in Chapter 7 of California’s Revenue Tax Code that it make a reasonable effort to sell the properties disposed of through tax lien sales at what is at least half the market rate and then take steps to ensure that those who lose their property in a tax-lien sale be provided with the difference between the sale price and the total of past-due taxes owed, penalties and reasonable sales costs in large measure because those losing their homes do not have the financial means to hire legal representation to ensure their rights are not violated.
The county acting in this fashion, Mason said, “removes any opportunity for the owner to receive the equity. Besides being immoral, it violates the takings clause of the Fifth Amendment and due process of the Fifth and Fourteenth Amendments.”
That is not Mason’s opinion. Rather, that principle was enunciated in the 1884 United States Supreme Court Decision in United States vs. Lawton and in other cases from around the country much more recently.
In United States vs. Lawton, the US Supreme Court held that when property is taken for non-payment of taxes, the property owner is entitled to proceeds that exceed taxes owed. Justice Samuel Blatchford wrote the majority opinion in United States vs. Lawton, stating, “To withhold the surplus from the owner would be to violate the Fifth Amendment to the Constitution and deprive him of his property without due process of law or take his property for public use without just compensation.”
In 2020, the Michigan Supreme Court held in the case of Rafaeli, LLC v Oakland County that Michigan’s tax foreclosure law that did not provide for the return of excess proceeds from tax foreclosure sales to a former property owner violated the Michigan State Constitution’s taking clause. The court ruled that after paying the tax debt, government must return the surplus profits to the former owner.
In a May 2021 decision by the United States Court of Appeals for the Sixth Circuit in Ohio, applying the reasoning of Supreme Court Justice Salmon P. Chase that “a law that takes property from A and gives it to B . . . is against all reason and justice,” ruled that when Montgomery County sold a home located in Dayton, Ohio that Alana Harrison had inherited from her mother to satisfy an outstanding tax bill her mother had not paid, the county violated Harrison’s rights when it did not return to her the difference between the sale price of the home when sold at auction and the taxes owed plus court costs, and fees to be collected by the sheriff, county auditor, and county recorder for processing the property seizure and holding the auction.
The precedent set in United States v. Lawton is applicable to all of California, including San Bernardino County. The Michigan and Ohio cases, while not considered precedent for California courts or the 9th U.S. Circuit Court which holds authority over San Bernardino County, those cases very likely presage what would occur if a similar case were to be litigated here.
Mason this week said that it was his position “that tax sales without benefit of a public auction confiscate a taxpayer’s property without potential for realization of potential excess proceeds, thereby violating the Fifth Amendment to the Constitution of the United States.”
He said that on April 12, when the San Bernardino County Board of Supervisors next meets, he will address the board and publicly call for eliminating the taxing loophole the California legislature has conferred upon counties and other governmental entities “that allows taxing agencies and non-government organizations to purchase tax-defaulted properties without bidding on them at a public tax sale.”
Mason on Tuesday will ask the board of supervisors to deny Chapter 8 sales of 36 tax-defaulted parcels. Those include the sales of the three aforementioned tax-defaulted parcels to The Wright Housing Corporation for the price of $97,500 plus the cost of notice; the sales of two tax-defaulted parcels to the Bighorn-Desert View Water Agency for the price of $6,100 plus the cost of notice; the sales of 27 tax-defaulted parcels to The California Desert Land Conservancy doing business as Mojave Desert Land Trust for the price of $68,800 plus the cost of notice; and the sales of four tax-defaulted parcels to the San Bernardino Mountains Land Trust for the price of $180,950 plus the cost of notice.
The three tax-defaulted properties the Wright Housing Corporation is requesting are improved, single-family residences, one in Yucca Valley, one in Twentynine Palms and a third in Hesperia, which are intended for use as low-income housing.
The property coveted by the Bighorn-Desert View Water Agency consists of a five-acre parcel located in Johnson Valley and another 1.25-acre spread, located in Yucca Valley, both undeveloped. The intended use for those parcels is for future capital improvements, including but not limited to water storage reservoir(s), pipelines, and appurtenances to serve as alternative water sources for current residents, as well as for a potable water production well to service projected growth and to supply blending water for the reduction of total uranium produced by other wells within the agency’s boundaries.
The 27 tax-defaulted parcels the California Desert Land Conservancy doing business as Mojave Desert Land Trust is seeking to lay claim to through the Chapter 8 sale are vacant and undeveloped lots, located in the northern portion of San Bernardino County. The intended use for those parcels is to preserve wilderness open space habitat and for general public recreational use.
Three of the four parcels the San Bernardino Mountains Land Trust has requested to take possession of through the Chapter 8 process are in Skyforest, contiguous to each other with a combined total acreage of 44.39. The fourth parcel is in the Deep Creek Area and is approximately 0.06 of an acre. The intended use for those parcels is to preserve natural open space and wildlife habitat, which is consistent with the goals and policies of San Bernardino County’s Countywide Plan. The acquisition of those parcels is also intended to further the objectives of the community’s preservation of open space and conservation of wildlife and riparian habitat in their respective areas.
Mason said he will “ask the board to deny such so-called Chapter 8 sales” from this time forward.

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