WASHINGTON – The Supreme Court revived on Thursday the claim of a 94 year old woman that a Minnesota County violated her Constitution by keeping $25,000 in profit when they sold her home at a tax foreclosure auction.
The court unanimously concluded that Geraldine Tyler may pursue her claim that such seizures are in violation of the Fifth Amendment’s takings clause, which requires the government to pay compensation if property is taken.
Chief Justice John Roberts stated that Tyler had a plausible case that should proceed, citing the Bible to show that taxpayers only have to pay what they owe the government.
He wrote: “The taxpayer is only required to pay Caesar what he is entitled to, but not more.”
Tyler’s house in Hennepin County (which includes Minneapolis) was seized by the county because she owed $15,000. Tyler’s Pacific Legal Foundation lawyers claim that the county sold her home for $40,000, and retained all of the proceeds.
The conservative group that litigates often on property rights calls this practice “home equity fraud.” The court has a conservative majority of 6-3 and is often sympathetic to claims for property rights.
In a Report published last year, the Pacific Legal Foundation stated that 12 states allow governments to collect more taxes than they are owed. Other states also have laws which could allow this practice under certain circumstances. When seized property is sold, the remaining states refund any surplus proceeds.
The foundation reports that six states — Arizona Colorado Illinois Montana Nebraska New Jersey — allow investors to keep equity in their properties after delinquent tax payments are made. Some states allow the government the retain the equity in properties when they are sold.
Tyler purchased the one-bedroom condo in a north Minneapolis neighbourhood in 1999. She lived there for over a decade. She fell behind in her taxes only after moving into a senior home, beginning in 2011.
Tyler owed $2,311 tax, plus almost $13,000 of fees and interest, which included penalties. The county then sold the property for $40,000 and kept the $25,000 profit.
Tyler’s claim was rejected by the 8th U.S. Circuit Court of Appeals in February 2022. In February 2022, the 8th Circuit Court of Appeals in St. Louis rejected Tyler’s claims.
In court documents, the state stated that Minnesota law “allows property owners ample time to protect their interest” before a property is seized. The owners have three years to pay their taxes and have the opportunity to repurchase seized property.
