The U.S. Supreme Court on Thursday unanimously ruled that states cannot keep the surplus proceeds from the sale of properties seized for unpaid taxes, a practice known as home equity theft.
Embed from Getty ImagesThe case involved Geraldine Tyler, a 94-year-old woman who lost her Minneapolis condominium to Hennepin County in 2015 over $15,000 in taxes and fees. The county sold the property for $40,000 and kept the entire amount, leaving Tyler with nothing.
Tyler sued the county, arguing that it violated the Fifth Amendment’s takings clause, which requires that the government pay just compensation when it takes private property for public use. She also claimed that the county’s action amounted to an excessive fine under the Eighth Amendment.
The Supreme Court agreed with Tyler on both counts, reversing a lower court ruling that dismissed her lawsuit. Chief Justice John Roberts wrote the opinion for the court, saying that taxpayers are only required to pay what they owe to the government, not more.
“The taxpayer must render unto Caesar what is Caesar’s but no more,” Roberts wrote, quoting a passage from the Bible.
The court also said that Tyler’s claim of an excessive fine was plausible, given that the county took more than twice as much as she owed. The court noted that the Eighth Amendment applies to state and local governments as well as the federal government.
Tyler’s lawyer, Christina Martin of the Pacific Legal Foundation, hailed the decision as a victory for property rights and a blow to home equity theft.
“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,” Martin said.
According to the foundation, a dozen states regularly allow governments to take more than they are owed in taxes and fees when they seize properties. Other states have laws that could permit the practice in some circumstances.
The Supreme Court’s ruling could have implications for other cases involving property seizures by governments, such as civil asset forfeiture and eminent domain.
Reference：
- States Are Not Entitled to Windfalls in Tax Disputes, Supreme Court Rules | The New York Times | May 25, 2023
- Supreme Court rules for homeowner in ‘equity theft’ dispute | NBC News | May 25, 2023
- Supreme Court Hears Property Tax Home Equity Dispute | Kiplinger | April 27, 2023