Supreme Court Strikes Down “Equity Theft” on Tax Liens in Landmark Case

Getting behind on your mortgage or taxes can be stressful and frightening, particularly if your home is seized for a tax sale. But you assume that in the end, you’ll get anything over what you owe in a forced sale. The local government can’t keep that money, can they? But that’s exactly what happened to 94-year-old Geraldine Tyler from Hennepin County, Minnesota. 

The Property Seizure

Ms. Tyler owned a condo in Hennepin County and owed about $15,000 in back taxes, plus interest and fees. The county seized her condo and sold it for $40,000. However, instead of allowing Ms. Tyler to recover the excess proceeds from the sale, about $25,000, the county kept the proceeds, citing Minnesota law that allowed local governments to keep excess proceeds from tax sales. Ms. Tyler filed suit alleging that the county kept the excess proceeds of her property in violation of the Takings Clause of the Fifth Amendment and the Excess Fines Clause of the Eighth Amendment. The district court dismissed the case, and the Eighth Circuit affirmed the dismissal.

Equity Theft Supreme Court Case

Ms. Hennepin took her case all the way to the Supreme Court of the United States, and the Court agreed with her, holding that “Hennepin County’s retention of the excess value of her home above her tax debt violated the Takings Clause.” The “Takings Clause” of the Fifth Amendment states, “private property [shall not] be taken for public use, without just compensation.” According to the Supreme Court, this is based on the principle that the government can’t take more than a taxpayer owes and stretches back to the Magna Carta in the 13th century. 

What does the Tyler v. Hennepin County case mean for you? Until now, Minnesota and 14 other states allowed local governments to keep excess funds from tax sales. But the Supreme Court has struck down “equity theft” no matter where you live.

You Need an Experienced Texas Surplus Funds Recovery Attorney

If you’re facing a tax sale in Texas, this isn’t a process you should try to navigate alone. Understanding your rights and how to get back any excess proceeds from a sale is important. The process isn’t easy to understand, but we can help you get your money back as quickly as possible. Call the experienced surplus funds recovery attorneys at Manfred Law at (713) 547-5460. Or contact them online to schedule your consultation.