Supreme Court to decide whether government entities can seize tax delinquent's property and profit

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The Supreme Court on Friday agreed to decide a property rights dispute on whether government entities violate the Constitution when they seize homes for failure to pay taxes and then keep all the proceeds or allow private investors to profit.

The justices will decide whether such seizures violate the takings clause of the Constitutionís Fifth Amendment, which requires that the government pay compensation when property is taken. They will also weigh whether government action could be viewed as an excessive fine under the Constitutionís Eighth Amendment.

The justices will weigh a claim brought by Geraldine Tyler, a 93-year-old whose property in Minnesota was seized by Hennepin County because she owed $15,000 in property taxes and related costs. The county sold the home for $40,000 and kept all the proceeds, Tylerís lawyers say.

The St. Louis-based 8th U.S. Circuit Court of Appeals ruled for the county in a February 2022 ruling, rejecting Tylerís constitutional claims. The state says that under Minnesota law it ďprovides ample opportunity for property owners to protect their interestsĒ before a property is seized. The stateís lawyers point out that owners have three years to pay the taxes and have an opportunity to repurchase the seized property.

I'm guessing this one will either be 8-1 or unanimous in favor of Tyler, though I have no clue who would author a dissenting opinion here. This is another possible candidate for Kentanji Brown Jackson's first opinion (assuming it is heard before June).

The state is very much "taking" here, I don't understand how it can be seen as anything other than that.  I am not so libertarian that I can't see why the state should be able to seize property if a taxpayer fails to pay taxes, but once what owed is paid and there is money left over, they should give it back (or put it in the bank until the person comes looking for it).

Yeah, why should the government as opposed to a private mortgagee get special treatment here? After the lien plus costs is satisfied, the excess should go to the debtor. I wonder how long this law has been around? I guess the situation is rare, because when there is substantial equity, the default is almost always cured. Here the debtor was clueless, not sentient, or something.

Mr. Reactionary:
As someone who sells tax delinquent property as part of my job, I totally agree that there shouldnt be profit. In Virginia all proceeds over what is owed to the government and to other creditors gets held in court escrow and the former owner gets it. Foreclosure is an equitable remedy for the right of collecting a debt. Anything over the debt amount owed by right should not go to the creditor but should go to the property owner imo.

These knuckles break before they bleed:
Never heard of this case despite it being in my county. But yeah in the example given if she owed $15k in taxes and the county made $40k off the property sale, they should pay her $25k.


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