The Supreme Court unanimously ruled that a Minnesota county wronged a grandmother when it forced the sale of her condominium over an unpaid tax debt and kept the sale proceeds that far exceeded the tax she owed.
Critics call such a practice “home equity theft.”
The case came after Pacific Legal Foundation (PLF) released a report late last year saying that 12 states and the District of Columbia allow local governments and private investors to seize dramatically more than what is owed from homeowners who fall behind on property tax payments.
Chief Justice John Roberts wrote the court’s opinion (pdf) in Tyler v. Hennepin County, Minnesota, court file 22-166, which was issued on May 25.
“The taxpayer must render unto Caesar what is Caesar’s, but no more,” Roberts wrote for the court.
Attorney Christina Martin of PLF, who represents dispossessed homeowner Geraldine Tyler, 94, told the court during oral arguments on April 26 that local governments should not be allowed to take the full value of a home as payment for much smaller property tax debts. PLF is a national not-for-profit public interest law firm that challenges government abuses.
Minnesota law allows counties to retain windfalls at the expense of property owners, and from 2014 to 2020, about 1,200 Minnesota residents lost their homes, along with the equity they held, for debts that averaged 8 percent of the home’s value, according to PLF.
Tyler owned a modest one-bedroom condominium in Hennepin County, but after she was harassed and frightened near her home, she moved to a new apartment in a safer neighborhood. The rent on her new apartment stretched her resources and she fell into arrears on her condo’s property tax bills, accumulating about $2,300 in taxes owed, along with $12,700 in penalties, interest, and costs.
The county seized Tyler’s condo, valued at $93,000, and sold it for just $40,000. Instead of keeping the $15,000 it was owed, the county retained the full $40,000, amounting to a windfall of $25,000, according to PLF.
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