The Supreme Court ruled 9-0 on Thursday in favor of a 94-year-old widow in her battle with a rapacious Hennepin County, MN, government which sold her home for a small tax debt and pocketed the change.
The story starts in 1999 when Geralidein Tyler bought a condo in Minneapolis. In 2010, she decided, for a variety of reasons, to move into a retirement community. The financial strain of paying a mortgage, condo fees, and rent on her retirement apartment caused Tyler to fall behind on her property taxes. By 2015, she owed $2,300 in back taxes, onto which the county had slapped interest and penalties, bringing the total to $15,000. The county confiscated Tyler’s title to the property and sold it at a tax auction for $40,000. The county applied $15,000 of the proceeds to Tyler’s debt and kept the rest. They reasoned that once the county confiscated her title, she no longer owned the property and was not entitled to anything. This left Tyler on the hook for a $50,000 mortgage and $12,000 in condo fees.
Equity Theft
Tyler’s case is not unusual. A dozen states permit city and county governments to sell the property at auction to settle tax claims and pocket the difference.
Tyler sued, making two claims. First, she said that the county confiscating the proceeds in excess of the back taxes and fees was a taking prohibited under the Fifth Amendment. She also claimed that fines and fees for delinquent taxes that ballooned a $2,300 bill to $15,000 violated the Eighth Amendment prohibition on “excessive fines.” The district court dismissed the case, reasoning that Tyler had no claim to the proceeds under Minnesota law and no grounds to challenge the fines and fees.