WASHINGTON, D. C. – Attorney General Karl A. Racine announced today that the District has agreed to settle a class-action lawsuit filed by Boies, Schiller & Flexner on behalf of property owners who lost homes and home equity due to a tax-sale foreclosure system that has since been reformed to provide more safeguards. The parties worked together to reach a settlement that will provide compensation to those who lost home equity for the failure to pay a small amount of taxes under the old system. The settlement also protects the District’s ability to collect real property taxes and ensure that owners who allow their properties to languish or become blighted are not rewarded. The settlement is subject to Court approval.

The suit was filed in federal court by Benjamin Coleman and the estate of Jean Robinson on behalf of a class of property owners who alleged that the District’s tax-lien system unfairly deprived homeowners of surplus equity when they failed to pay their real property taxes. It covers a small number of homeowners, like Mr. Coleman, who were not retroactively included when the District changed its tax-lien laws in 2014 to protect vulnerable residents from having their homes foreclosed on by private companies to whom the District had sold their tax lien.

Some of the property owners, like Mr. Coleman, owed small initial tax amounts but ultimately lost homes worth hundreds of thousands of dollars. The D.C. Council, the Office of the Chief Financial Officer, and the Office of the Attorney General (OAG) worked together with Legal Counsel for the Elderly to draft new legislation that safeguards property owners from losing homes over small tax debts. The Residential Real Property Equity and Transparency Amendment Act of 2014 has been hailed as a groundbreaking model for other jurisdictions by advocates for the poor and elderly.

The settlement announced today provides compensation to the small number of homeowners who would have received the relief intended under the new tax-lien statute, but whose homes were foreclosed on prior to it taking effect. The settlement enables the District to move forward with a tax-lien system that works for both the city and its residents.

“This settlement is good news for our city, because it provides the relief that the D.C. Council intended when it passed reforms of our tax-lien statute,” Attorney General Racine said. “Our office worked closely with the Office of the Chief Financial Officer as well as with attorneys representing the plaintiffs to achieve a productive settlement that helps homeowners like Mr. Coleman while protecting the District’s ability to collect taxes fairly. I want to thank Chief Financial Officer Jeffrey DeWitt and members of his staff as well as OAG Assistant Attorneys General Andrew C. Eberle and William Burk for their hard work with plaintiffs’ lawyers to come to a settlement that is a win-win for all parties.”

“We commend The Washington Post and Legal Counsel for the Elderly, who helped uncover in 2013 that vulnerable District citizens who were unable to pay real property taxes could lose their homes and home equity over a small tax bill,” said Bill Isaacson of Boies, Schiller & Flexner. “Now we also recognize the efforts of the D.C. Council to stop this injustice from happening in the future and Attorney General Racine’s office for entering this settlement to remedy what has happened before. It was a privilege to litigate this case since 2013 and now successfully to complete the final chapter of this important story.”

Attorney General Racine also expressed thanks for the continued hard work of District agencies and the D.C. Superior Court in ensuring a fair and effective tax-lien system. “The Office of the Chief Financial Officer, the Department of Consumer and Regulatory Affairs, Assistant Attorney General Eli Wood, and the judges of the D.C. Superior Court work tirelessly to ensure that real property taxes are collected, and that District property owners get every opportunity to pay their taxes and retain their property,” he said. “I thank them for their dual commitments to fairness and protecting the District’s public fisc.”