The Aroostook County town of Woodland settled a federal lawsuit for $40,000 in late March with a former resident who claimed the town did not fairly compensate him after it foreclosed on and sold his house to his son.
Preston Brown Sr. sued the town last July, seeking more than $100,000 in compensation for his property at 178 Morse Road, which Woodland acquired through unpaid taxes in 2020.
The town sold the property to Brown Sr.’s son, Preston Brown Jr., for around $2,500 — the amount of taxes owed on the property — after putting it out to bid in August 2020, Woodland selectmen and the lawsuit said.
Brown Sr. claimed that the sale was not conducted in a “commercially reasonable manner” and that he was owed fair market value for the property, which the town assessed to be worth $103,667 that year.
He was in federal prison for a portion of the time in which municipal liens against his property were filed, serving a three-year sentence for distributing bath salts.
The lawsuit was premised on the landmark 2023 Tyler v. Hennepin County Supreme Court ruling that determined the government cannot keep surplus equity from a property tax sale.
The ruling has retroactively applied to many municipal and county foreclosures nationwide. It was the impetus for Ellsworth to return nearly $118,000 last October to a family whose property it had tax-acquired and sold at auction.
Woodland did not appear to attain surplus equity from selling Brown Sr.’s property, given that it sold the property for what it was owed in taxes.
The town spurned a bid for $25,000 and several for around $6,000, and resolved the situation by selling the house to Brown Jr. for only the unpaid taxes, selectmen said during a March 30 emergency meeting. But the just compensation claim in the lawsuit still carried weight.
Woodland denied Brown Sr.’s allegations in court, but selectmen said the town had no option but to settle the lawsuit.
“We felt we did a good job to get it down to $40,000,” Selectman Kathy Ouellette said during the meeting.
“We’re kind of behind the eight ball on this,” Ouellette, who was not on the Select Board in 2020, said later. “It was handled improperly to begin with. And then when it got dumped on us, and we’re trying to figure it out, we’re like, ‘did you make a deal with Preston Sr. and Preston Jr.? Do you even remember doing it?”
Ouellette and Select Board Vice Chair Chris Fournier voted in favor of signing the settlement. Will Barnum, a newly-elected selectman who was previously on the board when the property was tax-acquired in 2020, abstained from voting because he did not have enough knowledge of the settlement, he said.
The $40,000 is not budgeted and is expected to be taken from the town’s reserve funds, selectmen said. Woodland’s total budget is around $2.3 million.
John Steed, the Stonington attorney who represented Brown Sr., declined to comment on the settlement.
