The U.S. Supreme Court on Thursday ruled unanimously in favor of a 94-year-old woman who argued that she was entitled to some of the profits from the sale of a condominium for which she owed taxes and penalties — a decision likely to result in changes to state's property forfeiture laws.
Geraldine Tyler filed a putative class-action suit against Hennepin County saying that officials unconstitutionally kept profits from the sale of her home, which the county seized to cover her tax debt. A District Court judge dismissed that suit for lack of cause and the Eighth Circuit affirmed, but Supreme Court justices who heard Tyler's case ruled that Hennepin County violated a constitutional clause which says the government must give people "just compensation" when seizing their property.
"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," Chief Justice John Roberts wrote in the court's opinion, which noted that the principle that a government may not take from a taxpayer more than is owed dates back at least as far back as the Magna Carta. "The taxpayer must render unto Caesar what is Caesar's, but no more."
Tyler was represented by the Pacific Legal Foundation, a nonprofit geared toward "limited government, property rights & individual rights," according to its website.
"Today's decision is a major victory for property rights in the United States," said Pacific Legal Foundation attorney Christina Martin, who argued the case before the Supreme Court. "This decision affirms that property rights are fundamental and don't depend solely on state law. The Court's ruling makes clear that home equity theft is not only unjust, but unconstitutional."
Pacific Legal said Tyler was unavailable to comment on the ruling.
The case, Tyler v. Hennepin County, centered around a Minneapolis condominium that Tyler bought in 1999. She lived in the space for more than a decade before Tyler and her family decided that it would be safer to move her to a senior community. She moved in 2010, but nobody paid for the condo's property taxes afterwards.
Tyler amassed $2,300 in unpaid tax debt by 2015. The debt ballooned to $15,000 because of interest and penalties, but the county seized her condo and erased her debt after selling the space for $40,000. State law allows officials to split profits from such sales between the county, the town, and the school district.
Assistant Hennepin County Administrator and Hennepin County Auditor Dan Rogan said in a statement that based on Thursday's decision, changes will come to Minnesota's tax forfeiture laws at the legislative level.
"Hennepin County represented the interests of Minnesota and many other states with laws that transfer title of abandoned property to reduce the burden to the public. Counties in Minnesota have faithfully administered the state's property forfeiture laws for well over a century," Rogan said. "Based on today's decision which found Minnesota's law unconstitutional, Minnesota's property tax forfeiture laws must be revised. Hennepin County will work closely with the Minnesota Legislature to create a process that is consistent with the Supreme Court's decision."
The Pacific Legal Foundation reports that at least a dozen states have similar laws allowing local governments to seize property for unpaid taxes. Such laws have affected nearly 9,000 homes and led homeowners to lose more than $860 million in life savings.
The data suggests that hundreds of Minnesotans are in similar situations, reporting that local governments sold at least 1,350 homes between 2014 and 2021.
"Economic penalties imposed to deter willful noncompliance with the law are fines by any other name," the Supreme Court's opinion read. "And the Constitution has something to say about them: They cannot be excessive."
Pacific Legal says Tyler's case will now return to trial court. She's expected to argue that she's owed the fair market value of the condominium, minus her debt. The nonprofit also plans to demand legislative changes from states whose laws violate Thursday's Supreme Court decision.
"States that neglect to follow PLF's guidelines for reform may be subject to liability in takings lawsuits," The foundation said in a statement.
______
