SUPREME COURT RULES ON SEIZURE OF EQUITY IN PROPERTY TAX CASE

“Taxpayer must render onto Caesar what’s Caesar”s, but no more” Tyler v.

Hennepin County, Minnesota, 598 U.S. 14(2023). It is most unusual for the Supreme Court to cite precedent in a ruling going back to early Christian teachings. Similarly, it is also unusual for the Supreme Court to cite the Magna Carta written in 1215 as precedent. In Tyler v. Hennepin County, Minnesota, 598 U.S.---( 2023), the Supreme Court overruled a statutory scheme under Minnesota law which permitted a local jurisdiction to retain home equity in excess of unpaid taxes. Using early Christian teaching, the Magna Carta and earlier Supreme Court cases, The Supreme Court found that Minnesota’s statutory scheme on seizure of home equity in excess of unpaid taxes violated the US Constitution’s Fifth Amendment (Takings Clause).
          The plaintiff in this case, Geraldine Tyler bought a condo in 1999 and lived in it until 2009. She moved out but neglected to pay property taxes on the unit after she left. By 2015, she owed $2300 in unpaid taxes and $13,000 in penalties and interest thereon. Hennepin County sued Ms. Tyler to recover the unpaid taxes. Eventually, Hennepin County sold Ms. Tyler’s unit for $40,000 which extinguished her unpaid taxes. Hennepin County retained $25,000 in Ms. Tyler’s home equity.
 Under Minn. Stat., Sections 281,18, 282.07, 282.08, a property owner had one year to pay taxes. If the property owner failed to pay the taxes due and owing within one year, the local jurisdiction could seize the property. The taxpayer then had three years to redeem the property and could remain in the home during this redemption period. Once the redemption period lapsed and the taxes remained outstanding, the local jurisdiction could sell the property or keep it. Should the property sell for more than the unpaid taxes, interest and penalties, the local jurisdiction was entitled to keep the excess. Thus, the property owner was deprived of the equity in excess of unpaid taxes, interest and penalties and a local jurisdiction received a bounty at the taxpayer's expense.
        Once Ms. Tyler’s  unit was sold without a return of substantial home equity, Ms. Tyler brought suit against Hennepin County in federal District Court. The case was dismissed for failure to state a claim. Ms. Tyler then appealed to the Eighth Circuit which affirmed the dismissal. Eventually, Ms. Tyler’s case reached the Supreme Court.
           The Supreme Court reversed the lower courts’ rulings finding that seizure of property in excess of unpaid taxes, penalties and interest was a clear violation of the Takings Clause.
“The County had the power sell Tyler’s home to recover unpaid  property taxes. But it could not use the toehold of the tax debt to confiscate more property than was due. By doing so, it effected’ a classic taking in which the government directly appropriates private property for its own use’ ”. 598 U.S. 5,6, 2023(citing to Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 324 (2002).  Finding that a private creditor in Minnesota has no right to keep excess value, such a right cannot inure to a government body. Hennepin’s argument that the taxpayer who permits taxes to remain unpaid abandoned such property was rejected by the Supreme Court. The Supreme Court found that Hennepin could cite no case for the proposition that failure to pay taxes resulted in an abandonment of that property. 
          Additionally, the Supreme Court found that unlike Minnesota, thirty-six states recognized that a property owner has a right to any excess value after property is sold for unpaid taxes. The scheme in the remaining states which do not recognize such property rights amount to a taking under the Fifth Amendment. The Supreme Court did not find it necessary to review Ms. Tyler’s argument under the Eighth  Amendment ( Excessive Fines).