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Supreme Court rules in favor of owner in ‘stock theft’ litigation

WASHINGTON — The Supreme Court ruled Thursday in favor of a 94-year-old woman following her claim that a Minnesota county violated the Constitution by retaining a $25,000 profit when it sold her home in a foreclosure sale.

The court unanimously found that Geraldine Tyler can proceed with her argument that Hennepin County’s decision to retain the surplus violated the Constitution’s Fifth Amendment taking clause, which requires the government to pay compensation when the property is taken.

Chief Justice John Roberts wrote, in a reference to a Bible passage, that taxpayers are only obligated to pay the government what is due to it.

“The taxpayer must render to Caesar what is Caesar’s but no more,” he wrote.

Tyler’s home in Hennepin County, which includes the city of Minneapolis, was foreclosed on because it owed $15,000 in taxes and fees. But the county sold the house for $40,000 and kept all proceeds, Tyler’s attorneys told the Pacific Legal Foundation.

The Conservative group, which often litigates property rights issues, calls the practice “home equity theft.”

“This decision affirms that property rights are fundamental and not dependent solely on state law. The court’s decision makes it clear that stealing equity from a property is not only unjust, but unconstitutional,” said Christina Martin, an attorney for the Pacific Legal Foundation.

Geraldine Tyler, center, lost her home to the county government for more than $15,000 in unpaid taxes and fees.Courtesy of the Pacific Legal Foundation

The group said in a report last year that a dozen states routinely allow a government to collect more than it is owed in taxes and that other states have laws that may allow the practice in certain circumstances. . The remaining states return excess proceeds when foreclosed properties are sold.

Six states — Arizona, Colorado, Illinois, Montana, Nebraska and New Jersey — allow private investors to retain equity in properties after delinquent taxes are paid, according to the foundation. Others allow the government to pocket the remaining equity when properties are sold.

Tyler bought the one-bedroom condominium in a north Minneapolis neighborhood in 1999 and lived there for more than a decade. It wasn’t until she moved into a retirement home that she fell behind on her taxes, starting in 2011.

The county seized the property in 2015, with Tyler owing $2,311 in taxes, as well as nearly $13,000 in related costs, including interest and penalties. A year later, the county sold it for $40,000, keeping the $25,000 profit.

In Tyler’s case, the St. Louis-based United States Court of Appeals for the 8th Circuit denied his claims in February 2022.

The state said in court documents that under Minnesota law, it “provides extensive opportunities for property owners to protect their interests” before properties are seized. Homeowners have three years to pay taxes and have the option to redeem seized property.

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