Geraldine Tyler and her family. Tyler, 94, is appealing to the U.S. Supreme Court to recoup money from a home seized and sold by Hennepin County, Minn., for an amount greater than taxes and fees she owed. (Pacific Legal Foundation)
Tyler v. Hennepin County, Minnesota
https://www.supremecourt.gov/opinions/22pdf/22-166_8n59.pdf
by Tyler Durden
Friday, May 26, 2023 – 10:40 PM
The Supreme Court on Thursday sided with an 94-year-old Minnesota grandmother who was wronged when her county forced the sale of her condominium over unpaid taxes, and kept the proceeds that far exceeded the taxes she owed – the latest “home equity theft” to make headlines.
The case followed a report late last year by the Pacific Legal Foundation which found that 12 states and DC allow local governments and private investors to seize far more than what is owed from homeowners who fall behind on property tax payments.
Writing this opinion was Chief Justice John Roberts, who wrote in Tyler v. Hennepin County that “The taxpayer must render unto Caesar what is Caesar’s, but no more.”
Christina Martin, an attorney for homeowner Geraldine Tyler, told the court during April 26 oral arguments that local governments shouldn’t be able to seize and keep the full value of a home as payment for much smaller property tax debts.
Minnesota law allows counties to retain windfalls at the expense of property owners – which between 2014 and 2020 applied to around 1,200 Minnesota residents who lost their homes and all the equity in them, for debts that averaged just 8% of the home’s value, according to PLF.
Tyler owned a modest one-bedroom condominium in Hennepin County, but after she was harassed and frightened near her home, she moved to a new apartment in a safer neighborhood. The rent on her new apartment stretched her resources and she fell into arrears on her condo’s property tax bills, accumulating about $2,300 in taxes owed, along with $12,700 in penalties, interest, and costs.
The county seized Tyler’s condo, valued at $93,000, and sold it for just $40,000. Instead of keeping the $15,000 it was owed, the county retained the full $40,000, amounting to a windfall of $25,000, according to PLF. -Epoch Times
Tyler sued, arguing that her Fifth Amendment rights were violated when the government breached the ‘Takings Clause.’ Her lawsuit was originally rejected by the courts, including the US Court of Appeals for the 8th Circuit, which found the seizure legal.
The Supreme Court disagreed, ruling that the principle that Tyler’s right not to have her her property seized goes back to English law, and as far back as the Magna Carta of 1215.
“The Takings Clause ‘was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,’” wrote Roberts.
“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.”
“[I]f a bank forecloses on a home because the homeowner fails to pay the mortgage, the homeowner is entitled to the surplus from the sale.”
In collecting all other taxes, “Minnesota protects the taxpayer’s right to surplus.” So if a taxpayer falls behind on income tax and the state confiscates and sells the property, state law provides that any surplus must be returned to the owner. The same rule is followed regarding arrears of personal property tax—such as for a car—and real property tax.
In Tyler’s case, the “State now makes an exception only for itself, and only for taxes on real property. But ‘property rights cannot be so easily manipulated,’” Roberts wrote, citing Cedar Point Nursery v. Hassid, a 2021 Supreme Court decision that pitted the property rights of an employer against labor organizing rights. -Epoch Times
“Minnesota may not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when it is the one doing the taking,” Roberts wrote.
Dan Rogin, Hennepin County assistant administrator and auditor told the Times in an email: “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.”
Justices rule Minnesota county violated takings clause
By Amy Howe on May 25, 2023 at 12:09 pm
In 2016, a Minnesota county sold 94-year-old Geraldine Tyler’s condo at auction after she failed to pay her property taxes for several years. The sale yielded $40,000; Hennepin County kept not only the $15,000 in taxes, penalties, and costs that Tyler owed it, but also the $25,000 that was left over. The Supreme Court on Thursday ruled that the county’s actions violated the Fifth Amendment’s takings clause, which bars the government from taking private property for public use without adequately compensating the property owner.
Writing for a unanimous court, Chief Justice John Roberts began by addressing – and rejecting – the county’s argument that Tyler lacked a legal right, known as standing, to bring her takings claim at all. The county contended that Tyler was not actually harmed by the sale of her condo because she may have also had a mortgage for $49,000 on the property, as well as a $12,000 lien for unpaid homeowners’ association fees.
The justices dismissed the county’s protests as speculation, noting that the county had never actually provided evidence of either the mortgage or the lien. But in any event, Roberts continued, “Tyler still plausibly alleges a financial harm: The County has kept $25,000 that belongs to her.” If she had received that money, Roberts wrote, Tyler could have used it to pay down some of the debts linked to the condo.
Turning to the merits of Tyler’s challenge, Roberts framed the question before the justices as whether the $25,000 surplus remaining after Tyler’s condo was sold to pay her tax debt to the county is “property” for purposes of the takings clause. The county pointed to a 1935 state law that strips an owner who falls behind on her property taxes of her interest in the property. Therefore, the county argued, there was no property for the government to take.
The court disagreed, stressing that “property rights cannot be so easily manipulated.” Indeed, Roberts observed, even Minnesota itself “recognizes that in other contexts a property owner is entitled to the surplus in excess of her debt.” Although the county can sell Tyler’s condo to recover the $15,000 that she owes it, Roberts wrote, it cannot “use the toehold of the tax debt to confiscate more property than was due.” By keeping the $25,000, Roberts concluded, the county “effected a ‘classic taking in which the government directly appropriates private property for its own use.’”
Because it ruled in Tyler’s favor on her takings clause claim, the court did not resolve Tyler’s argument that the county’s actions also violated the Eighth Amendment’s ban on excessive fines. In a concurring opinion, Justice Neil Gorsuch (joined by Justice Ketanji Brown Jackson) suggested that, in his view, Tyler would have prevailed on this ground as well.
Lawyer Christina Martin of the Pacific Legal Foundation, who represented Tyler in the Supreme Court, praised the court’s ruling in a press release. She said that it “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.”
