Why are we allowing sprouts to bid on houses at all

[Seraphor]

I don't see anything against someone owning a house on two different data centers.

confiscated -
(of property) taken or seized with authority.

If you can only own two houses (1 personal 1 FC) per account, then by extension you cannot own any more than that, same DC or otherwise.
The only option is to have multiple accounts, and you can't police that. Anyone can sign up with different emails, bank accounts, or whatever, to circumvent any account based restrictions, yet account based is the highest tier you can implement.

I'm aware of the definition of the word, how would it be implemented in game? How are you deciding who loses a house and how it is removed if it's not already prohibited by the system in place?
If it's automatic, then why not just prohibit them from buying the plot in the first place?

Are you suggesting SE employ their own fraud police to investigate accounts to see if they're owned by the same person? Then they retroactively remove their houses?
I'd say they already have their hands full with RMT.