The Pung estate argued the county took property worth nearly $200,000 to satisfy a disputed debt of just over $2,000
The U.S. Supreme Court on Tuesday unanimously sided with Isabella County, Michigan, rejecting a family’s claim that local governments must pay homeowners the full fair market value of property seized and sold in tax foreclosures rather than the lower price obtained at public auction.
In the 9-0 decision, the court ruled that under the Fifth Amendment, “the proper baseline under the Takings Clause is the price obtained in a tax sale, at least when the sale is fairly conducted in light of our country’s history of tax sales.”
Writing for the court, Justice Samuel Alito explained that “neither the Fifth nor the Eighth Amendment requires the government to compensate former owners based on the hypothetical fair market value of their property.”
The high court noted that creating a fair-market-value baseline would impose “unprecedented burdens” on local governments seeking to collect unpaid taxes, making these sales “impractical.”