Introduction

Families have lost homes — and life savings — over debts as small as a water bill or even $8 in taxes. These aren’t rare exceptions — they’re part of a troubling pattern across the country. Every year, properties worth hundreds of thousands of dollars are stripped away over debts that amount to a fraction of their value. Those living on fixed incomes — and families already stretched to their limits — are often the ones who suffer most.

Here are three real stories that show how small debts can lead to devastating losses.

The $8 Tax Debt That Sparked a Landmark Michigan Ruling

In Oakland County, Michigan, a homeowner named Uri Rafaeli underpaid his property taxes by just $8.41. The county foreclosed, auctioned the property for $24,500, and kept every dollar — giving Rafaeli nothing. Years later, the Michigan Supreme Court ruled this practice unconstitutional. But for countless families, the damage was already done.

👉 Read the full case summary on Justia Law.

Brooklyn Man Nearly Lost His Paid-Off Building Over a Water Bill (New York City)

One Brooklyn homeowner thought his property was safe — the mortgage had been paid off years earlier. But a small, unnoticed water bill slipped through the cracks. With penalties piling up, the debt grew, and the city placed the property into its lien-sale pipeline. In the end, a home worth hundreds of thousands of dollars was lost over a utility debt worth just a fraction of its value.

👉Read the full ABC7 investigation. ABC7NY

The Hidden Tax Crisis Forcing Americans From Their Homes (Brooklyn & Baltimore)

In Brooklyn, two nearly identical homes — just a few miles apart — faced drastically different tax bills. One family paid nearly double the property taxes of the other, despite owning a lower-value home. That unfair burden — thousands more each year — pushed them toward foreclosure. In Baltimore, a 70-year-old woman battling cancer fell behind on her property taxes by just a few thousand dollars. Even after making payments, the city applied them incorrectly, leaving her still in arrears on paper. Her paid-off home was eventually sold at auction for far less than its value, and she received nothing from the sale.

👉Read more in ABC News’ “Highballed” investigation.

How Surplus Funds Work — in Plain English

When a property is sold at foreclosure or tax deed auction, the sale proceeds first pay off what’s owed — the mortgage balance, court costs, taxes, and any liens. If the property sells for more than that, the extra money is called surplus funds. Those funds don’t belong to the county — they can be claimed by the former homeowner, their heirs, or another rightful beneficiary.

What to Do

● Gather key documents (tax bills, foreclosure notices, proof of ownership)

● Check whether a foreclosure or tax deed sale has already happened

● Identify deadlines — some courts hold surplus funds only for a set time before moving them to unclaimed property

● File correctly — claims often require notarized forms, supporting evidence, and sometimes a hearing. Small mistakes = big delays

Conclusion

These stories highlight one painful truth: families don’t just lose their homes in foreclosure — they often lose the wealth they worked their whole lives to build. And without help, the surplus funds that could give them a fresh start too often go unclaimed.

At Surplus Capital Recovery Group LLC, we fight to make sure your family gets back what’s rightfully owed.