Woman entitled to cash in on foreclosed condo sold by Hennepin County

The U.S. Supreme Court ruled unanimously Thursday in favor of a 94-year-old woman who argued she was entitled to a portion of the proceeds from the sale of a condominium for which she owed taxes and penalties – a decision likely to lead to changes to laws on the confiscation of state assets.

Geraldine Tyler has filed a putative class action lawsuit against Hennepin County, claiming authorities unconstitutionally retained profits from the sale of her home, which the county foreclosed to cover its tax debt. A district court judge dismissed that action for lack of cause and the Eighth Circuit upheld, but Supreme Court justices who heard Tyler’s case ruled that Hennepin County violated a constitutional clause that states that the government must give people “just compensation” when seizing their property.

“A taxpayer who loses her $40,000 home to the state to pay off a $15,000 tax debt has made a far greater contribution to the public treasury than she should have,” wrote the Chief Justice John Roberts in the court’s opinion, who noted that the principle that a government cannot take from a taxpayer more than is due to it dates back at least to Magna Carta. “The taxpayer must render to Caesar what is Caesar’s, but no more.”

Tyler was represented by the Pacific Legal Foundation, a nonprofit focused on “limited government, property rights and individual rights,” according to its website.

“Today’s decision is a major victory for property rights in the United States,” said Christina Martin, an attorney for the Pacific Legal Foundation, which argued the case in the Supreme Court. “This ruling affirms that property rights are fundamental and not dependent solely on state law. The Court’s ruling makes it clear that stealing equity from a property is not only unjust, but unconstitutional. ”

Pacific Legal said Tyler was unavailable to comment on the ruling.

The case, Tyler v. Hennepin County, was centered on a Minneapolis condominium that Tyler purchased in 1999. She lived in that space for more than a decade before Tyler and his family decided it would be safer to move her to a community for the elderly. She moved in 2010, but no one paid the condo property taxes after that.

Tyler amassed $2,300 in unpaid tax debt in 2015. The debt soared to $15,000 due to interest and penalties, but the county foreclosed on his condo and wrote off his debt after selling the space for $40,000. $. State law allows officials to divide the profits from these sales among the county, city, and school district.

Deputy Hennepin County Administrator and Hennepin County Auditor Dan Rogan said in a statement that based on Thursday’s decision, changes would be made to Minnesota’s tax forfeiture laws at the legislative level.

“Hennepin County has represented the interests of Minnesota and many other states with laws that transfer title to derelict property to reduce the burden on the public. Minnesota counties have faithfully administered the property forfeiture laws of state for more than a century,” Rogan said. “Based on today’s ruling that declared the Minnesota law unconstitutional, Minnesota’s property tax forfeiture laws must be reviewed. Hennepin County will work closely with the Legislature of Minnesota to create a process consistent with the Supreme Court’s decision.”

The Pacific Legal Foundation reports that at least a dozen states have similar laws allowing local governments to seize property for unpaid taxes. These laws affected nearly 9,000 homes and cost homeowners more than $860 million in savings.

The data suggests hundreds of Minnesotans are in similar situations, reporting that local governments sold at least 1,350 homes between 2014 and 2021.

“Economic sanctions imposed to deter willful non-compliance with the law are fines by any other name,” the Supreme Court’s opinion reads. “And the Constitution has something to say about them: they cannot be excessive.”

Pacific Legal says Tyler’s case will now return to trial court. She is expected to argue that she owes the fair market value of the condominium, less her debt. The nonprofit also plans to demand legislative changes from states whose laws violate Thursday’s Supreme Court ruling.

“States that fail to follow the PLF’s reform guidelines may be subject to revenue lawsuits,” the foundation said in a statement.