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Property Rights Come Under Attack in Oregon by State Constitution
Looking back at Oregon HB 3453 and Senate Bill 929
- Scott Rohter, December 2010, Updated and Republished March 2012
Once upon a time there was a little boy and girl, who lived happily together with their parents, in a little house far outside the city limits of Eugene, Oregon, out in the country. Time passed, and as the years went by, the children grew up, their parents died, the house grew old, and so did the little boy and girl. A little community sprang up all around them, but the two siblings never moved too far away from home, and while they did occasionally live in other houses over the years, this was the only real home they ever knew. Then one day, along came a big bad wolf in disguise, actually it was two big bad wolves, Lane County and the City of Eugene, and together they huffed and they puffed, and while they didn’t actually blow the house down, it’s still there today with some alterations, they did blow Jack and Betty Neely right out of their home. That was their family home. It was the home that Jack and Betty grew up in. And it was the home that their father built with his own two hands. Homelessness after the foreclosure, followed by a heart attack and the untimely death of her brother in 1995, broke Betty Neely’s heart and she quietly left Oregon several years later! What we have here is a deplorable situation and a very horrible law, ORS 223.525, that violates the US Constitution and needs to be changed in this year’s session of the Oregon Legislature! Read on:
Retrospective: Eugene Oregon, 1995
Foreclosure Reform Bill, HB 3453 passes Oregon House 43-7 but companion bill languishes in Senate
In 1995 after a protracted dispute over a sewer assessment lien, the City of Eugene foreclosed on the childhood home of Jack and Betty Neely at 1600 Horn Lane, Eugene Oregon. Then Lane County evicted the elderly siblings, Jack age 76 and Betty age 66, and sold their home at a public sale at the county courthouse to the lone bidders, Marilyn Goss and Leroy Bench of Eugene for $7,411, the exact amount of the lien against it! The Neely home had been last appraised at $63,710. That forfeiture was quite a boondoggle for Goss and Bench!
Except for the sewer assessment lien, the property was owned free and clear by the Neely's, and there were no other recorded liens against the deed. The difference between the appraised value and the amount that the property sold for at foreclosure was $56,299. This was the equity that Jack and Betty Neely had in their home. It was their life savings! It was effectively stolen from them by the City of Eugene and Lane County in order to perfect a $5000 sewer lien and then handed over to Marilyn Goss and Leroy Bench, currently of 2128 W 28th St., Eugene Oregon. They bought the Neely house for $7,411and sold it 5 years later in 1999 for $100,650 and meanwhile they purchased a much nicer house in the South Eugene Hills for $158,000, with the equity that rightfully belonged to Jack and Betty Neely!
Following the foreclosure on their house and their subsequent eviction, Jack Neely died homeless, one month later of a heart attack, and Betty Neely was forced to go into Public assistance housing. She got an apartment at Yapoah Terrace. I'm sure they couldn't believe that their country would actually do this to them. Jack died broken hearted. In 2005 Betty Neely left Oregon and moved south to California where she still lives with family members today. It was a tragic story and an often forgotten one in the history of Eugene, and in the struggle between "Big Development" and the residents of Lane County.
Many members of Eugene's political establishment were around back then and they are still around today, as well as the same horrible law, ORS 223.525 that did the Neely's in! Mayor Kitty Piercy was then a freshman assemblywoman representing River Road and Santa Clara who only reluctantly agreed to sponsor the reform bill, HB 3453. Floyd Prozanski was a state assemblyman from South Eugene in 1995 but he was officially excused from voting on the bill. Peter Sorenson was a state senator from Eugene who was not at all helpful in supporting the original bill. Today he is a Lane County Commissioner. In 2009, I asked then state senator Floyd Prozanski to sponsor a new version of HB 3453. It did not even receive a hearing that year in the Democrat controlled legislature. Floyd told me that they were very busy that year in Salem. Commissioner Peter Sorenson said he would work to bring some kind of reforms at the County level but then he never got back to me!
The horrible law which allowed the Neely's to loose everything they had and even cost Jack Neely his life, is still on the books today. The danger is still there! ORS 223.525 is a deplorable law! It requires that a property in foreclosure be sold for no more than the actual amount of the lien against it! That's correct, you could lose your home in a government foreclosure for the exact amount of an unpaid lien! This violates the "Nor shall private property be taken for public use without just compensation" Clause of the 5th Amendment to the US Constitution commonly referred to as the "Takings Clause." In 1995 I wrote Oregon HB 3453 to correct this inequity. If it had passed, it would have prohibited the government, when foreclosing on private property, from selling it for the exact amount of a lien. Instead it would have required the government to sell the property for not less than 80% of its fair market value and return to the judgment debtor, the balance of the sale price after the lien and interest, and all costs associated with conducting the sale were deducted. At least that would be just compensation! It passed the Oregon House 43-7, but a companion bill SB 572 died in the Senate.
Editors Note: One aspect of what Eugene did in forcing the residents of River Road and Santa Clara to hook up to the Eugene Municipal Sewer System without jurisdiction and without actually even representing them was later declared to be illegal, in the Oregon Appellate Court, in the City of Eugene v. Kashin/Nalven.
ANALYSIS: So much for Jack and Betty Neely's high principles! Marilyn Goss and Leroy Bench of Eugene took $7,411 and paid off the Neely's original sewer assessment lien of $5,000 plus interest, and then regardless of the Neely's high principles, and with the assistance of the City of Eugene, Lane County and the State of Oregon, they converted that $5,000 bill for sewers (which was illegal) into a $158,000 house in Eugene's Southwest hills for themselves! The law that allowed this horrible injustice to occur to the Neely's is ORS 223.525. It must be repealed or amended to conform to the US Constitution! HB 3453 or SB 929 needs to be reintroduced in the legislature and passed in order to protect all private property owners in Oregon and in order to bring the Oregon State Constitution into compliance with the United States Constitution!
UPDATE: This year Oregon House Bill 4111 finally did bring the Oregon Constitution into better compliance with the United States Constitution. The Bill isn't perfect, but it's a lot better than the law regarding foreclosure is right now. While there is still some work that needs to be done to better protect Oregon property owners, I have received assurances that the Legislature will consider doing that next year.
The Oregon Observer Article: Eugene Loses At Court of Appeals (1998)
"A journalist has no better friend than the truth." - Scott Rohter