(Tom Gantert, The Center Square) The U.S. Supreme Court will hear arguments later this month in a case determining whether government has the right to keep all the proceeds from foreclosed properties.
The Tyler v. Hennepin County case begins April 26. The case involves a Minnesota woman who owed $15,000 in taxes on her condominium. Hennepin County foreclosed on the property and sold it for $40,000 and kept the money remaining after paying off the woman’s debt.
The U.S. Supreme Court will decide if the government keeping the surplus equity was unconstitutional. The decision will have nationwide implications as there are 14 states that have similar type laws involving property foreclosure, according to the Pacific Legal Foundation.
The ACLU stated the case would determine “whether taking and selling a home to satisfy a debt to the government, and keeping the surplus value as a windfall, violates the Fifth Amendment’s takings clause. The Fifth Amendment guarantees that the government cannot take private property for public use without just compensation.”
The Pacific Legal Foundation, which is representing Geraldine Tyler, termed it “home equity theft.”
The Pacific Legal Foundation researched the issue and found 8,950 homes and more than $860 million were lost to home equity theft from 2014 to 2021.
“You are dangling a get-rich-quick scheme in front of the government,” said David Deerson, an attorney for Pacific Legal Foundation, in an April 5 press conference.
Hennepin County Assistant County Administrator Dan Rogan stated that forfeiture is not a source of profit when factoring in all costs. He said Hennepin County’s program does not manage to break even.
“Here, the plaintiff left her Minneapolis condo in 2010 and stopped paying property taxes,” Rogan said in an email. “Title transferred to the state five years later. The plaintiff chose to abandon her interests in the property rather than acting to protect any equity she might have had.”
Rogan continued: “Hennepin County works very hard to help anyone who wants to avoid forfeiture. Taxpayers may avoid forfeiture by paying their taxes, selling their property to recoup any equity, or by agreeing to a payment plan. Senior citizens may also participate in the Senior Citizens’ Property Tax Deferral program, which caps seniors’ property tax payments. And Hennepin County has pioneered a Navigator Program to help residents avoid forfeiture with financial counseling and other assistance. When owners ignore all of these options, the legislature has chosen to protect the public from further harm by transferring title to the government. The taxpayers should not be the default realtor, property manager, and auctioneer.”
Organizations from about a dozen states are filing opinions on the case.
Americans For Prosperity, the Chamber of Commerce, the ACLU and the National Association for Realtors were in support of the private citizen.
“These seizures often target poorer communities—and often the elderly within those communities—who own their homes but have insufficient disposable income to pay their taxes,” the ACLU stated in its amicus brief.
Associations that lobby for government were in support of Hennepin County.
“Property tax foreclosure is a last resort that arises when a property owner fails to comply with numerous notices of deficiency, and fails to redeem their property within a statutory timeframe,” the Michigan Association of Counties wrote in an amicus brief in support of Hennepin County.
Oakland County in Michigan also supported Hennepin County.
“Minnesota provides more-than-generous opportunities for delinquent taxpayers to pay their duly owed taxes,” Oakland County stated in its amicus brief. “But if a taxpayer fails to take advantage of any of these opportunities or to simply sell the property, pay the taxes, and keep any surplus value, then the public benefits when Minnesota counties demolish or rehabilitate dilapidated or abandoned structures. Putting the onus on those responsible for paying the taxes puts more properties to use, which benefits all Minnesota citizens.”
