WASHINGTON — The Supreme Court on Wednesday considered a 94-year-old woman’s claim that a Minnesota county violated the Constitution by withholding a $25,000 gain when she sold her home in a tax foreclosure sale.
Geraldine Tyler’s home in Hennepin County, which includes the city of Minneapolis, was seized because she owed $15,000 in taxes and fees. But the county sold the house for $40,000 and kept all the proceeds, say Tyler’s lawyers at the Pacific Legal Foundation.
The conservative group, which often litigates property rights issues, calls the practice «home equity theft» and is asking the Supreme Court to end it. The court, which has a 6-3 conservative majority, is often sympathetic to property rights claims.
The Pacific Legal Foundation said in a report last year that a dozen states regularly allow the practice and other states have laws on the books that might allow it in some circumstances. The remaining states return the surplus when a seized property is sold.
Six states (Arizona, Colorado, Illinois, Montana, Nebraska and New Jersey) allow private investors to hold shares in properties after back taxes are paid, says the Pacific Legal Foundation. Others allow the government to pocket the remaining capital when the property is sold.
Judges will decide whether such seizures violate the condemnation clause of the Constitution’s Fifth Amendment, which requires the government to pay compensation when property is taken. They will also weigh whether the government’s action could be seen as an excessive fine under the Eighth Amendment to the Constitution.
The case is the last oral argument of the Supreme Court’s term, which runs from October to June. From now until the end of June, the judges will focus on issuing rulings in cases in which they have heard arguments. These include some potential blockbusters on affirmative action on college admissions, voting rights, and religion.
Tyler bought the one-bedroom condo in a north Minneapolis neighborhood in 1999 and lived there for more than a decade. It was only after she moved into a nursing home that she fell behind on her taxes, starting in 2011.
The county seized the property in 2015, with Tyler owing $2,311 in taxes, plus nearly $13,000 in related fees, including interest and penalties. A year later, the county sold the property for $40,000, pocketing the $25,000 proceeds.
In Tyler’s case, the St. Louis-based US Court of Appeals for the 8th Circuit rejected his claims in a February 2022 ruling.
The state says that, under Minnesota law, it «provides ample opportunity for property owners to protect their interests» before a property is seized. Owners have three years to pay the taxes and have the opportunity to buy back the seized property.
In effect, Tyler argues that the Constitution «required the state to act as your real estate agent, sell the property on your behalf, and write a check for the difference between the tax liability and the fair market value,» attorneys for the court said. state. in court documents.
It has long been established in US law that local governments can seize delinquent assets as long as due process requirements are met and compensation has never been required, the lawyers argued.