A Recent U.S. Supreme Court Ruling and Its Effect on Tax Sales

By Paige Perrucci | Nov. 10, 2023 | 3 min. read

The U.S. Supreme Court ruled in favor of a 94-year-old Minnesota woman by declaring part of their state tax sale law unconstitutional earlier this year.

Geraldine Tyler purchased her condo in 1999 in Minneapolis, Minnesota. As she got older, she decided to relocate to a senior living home where she rented an apartment but did not sell the condo. A year later, Tyler and her family failed to pay her property taxes at the condo, and the taxes began to accumulate. To be exact, Tyler owed $2,300 in property taxes, however, with penalties, interest and costs, the total amount came to $15,000.

Minnesota state laws are not very friendly when it comes to tax delinquent lands. In 2016, due to the debt in property taxes, Hennepin County seized the title of her condo and sold it at auction for $40,000. Hennepin County kept the entire $40,000, which was essentially a profit of $25,000 after satisfying her $15,000 delinquency.

Tyler filed a class action against Hennepin County. In 2020, the federal district court dismissed her case and opined that “the very act of forfeiture wipes out an owner’s property interest.” Tyler worked with Pacific Legal Foundation to appeal her case to the Eighth Circuit Court, which affirmed the dismissal until the U.S. Supreme Court granted her petition for review.

The U.S. Supreme Court issued its final judgment to reverse the trial court’s decision in favor of Hennepin County. It was a unanimous decision for Tyler. The opinion stated that Hennepin County unconstitutionally retained the excess value of her home above her tax debt in violation of the Takings Clause of the Fifth Amendment. The opinion pointed out that “A taxpayer who loses her $40,000 house to the state to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed. The taxpayer must render unto Caesar what is Caesar’s, but no more.”

After this opinion was issued by the court, some states had to take action to ensure that their tax sale laws were compliant with the decision. Thankfully, Pennsylvania is way ahead of the game for tax foreclosures. Section 5860.205(d) provides how any money collected will be distributed from a tax sale with any surplus proceeds going to the owner of the property after all other relevant debts, claims and liens have been paid off.

Pennsylvania’s tax foreclosure laws lean towards protecting home equity, which in turn protects homeowners. I shall lightly quote what Supreme Court Chief Justice Roberts said, the taxpayers must render unto Pennsylvania’s tax jurisdictions what is theirs, but no more.

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