In a recent ruling, the United States Supreme Court sided with a 94-year-old woman who accused the government of stealing her home equity. Geraldine Tyler is a 94-year-old woman who got nothing from the sale of her condominium after the county pocketed the full $40,000 because she owed $15,000 in unpaid taxes and penalties. The court ruled that keeping the additional $25,000 was unconstitutional. The unanimous decision is a win for property owners under the Fifth Amendment of the United States Constitution.
"The taxpayer must render unto Caesar what is Caesar's, but no more." With those words, Chief Justice John Roberts and a unanimous U.S. Supreme Court on Thursday sided with the 94-year-old Minnesota woman who received no compensation when the government seized her home over a small unpaid tax bill and pocketed the profit. Ms. Tyler was happy about what this win will mean for a whole lot of people, and especially seniors who would otherwise lose their savings and be put out on the street.
In his opinion, Roberts said the state of Minnesota violated the Fifth Amendment's prohibition against government taking private property without "just compensation" in 2015 when it took Geraldine Tyler's one-bedroom condominium. Tyler also claimed that the county acted in violation of the Excessive Fines Clause of the Eighth Amendment.
"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 than was due," Roberts wrote.
"Tyler's legal win is a huge victory for property rights in the United States," said attorney Christina Martin with the Pacific Legal Foundation, which represented Tyler in the case before the Court. "This decision 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."
Tyler, who now lives in an apartment building for older people, owed $2,300 in unpaid taxes, plus interest and penalties totaling $15,000, when the county took title to the one-bedroom apartment in 2015. The county claimed she did nothing to hold onto her residence, which was sold the next year.
Minnesota is among around a dozen states that "engage in home equity theft," according to the Pacific Legal Foundation, a non-profit law firm focused on property rights that represented Tyler for free. At least 8,950 homes were sold because of unpaid taxes, and the former owners received little or nothing in certain states between 2014 and 2021, according to the group. Those states are: Alabama, Arizona, Colorado, Illinois, Maine, Massachusetts, Nebraska, New Jersey, New York, Oregon and South Dakota, the group said.
Thomas Berry, a constitutional lawyer with the CATO Institute, a libertarian think tank, also celebrated the ruling, saying, "After this decision, states will no longer be able to get away with the pernicious practice of 'home equity theft.'" The court rejected arguments made by Hennepin County, which seized the home, that Tyler essentially abandoned her property and could have sold it herself to pay the debt and keep any excess.
Roberts noted that Minnesota was also an outlier in not providing any opportunity for Tyler to obtain the excess after the state's sale. Thirty-six states and the federal government require that excess value be returned to the taxpayer, the court said. "The County had the power to sell Tyler's home to recover the unpaid property tax bill," Roberts wrote. "But it could not use the toehold of the tax debt to confiscate more property than was due."
The decision clears the way for Tyler to return to a lower court to seek compensation from the state. It also effectively strikes down the laws like Minnesota's, which have been branded as "equity theft" by critics. So-called home equity seizure is legal in roughly a dozen states that authorize municipalities to take possession of a home in the event of delinquency, sell the property, and keep the entirety of earnings, regardless of the value of the outstanding tax bill.
Dan Rogan, an assistant county administrator and Hennepin County auditor, said in a statement that given the ruling, Minnesota's property tax forfeiture laws will be revised. "Based on today's decision which found Minnesota's law unconstitutional, Minnesota's property tax forfeiture laws must be revised," he wrote. "Hennepin County will work closely with the Minnesota Legislature to create a process that is consistent with the Supreme Court's decision."