The Supreme Court is set to hear arguments Wednesday about a 94-year-old woman’s lawsuit against Hennepin County, Minnesota, which sold her home to cover a tax debt and kept over $20,000 in surplus cash beyond the tax debt that was owed.
The case, Tyler v. Hennepin County, challenges the practice of home equity theft, which allows the government to take an owner’s property to cover an outstanding debt without returning the sale amount beyond what is owed. It’s already illegal in all but a dozen states and Washington D.C.
“If there’s one thing we can all agree on, it’s that the government shouldn’t be allowed to steal from its citizens,” Pacific Legal Foundation attorney David Deerson told the Daily Caller News Foundation. “But home equity theft laws allow local governments to do just that. In fact, a report by my firm — Pacific Legal Foundation — found that from 2014-2021, 8,950 homes and more than $860 million in life savings were lost to home equity theft.”
Geraldine Tyler moved out of her one-bedroom Minneapolis condo and into an apartment in a senior community in 2010. By 2015, she had accrued a $2,300 tax debt on her condo, which compounded to $15,000 after fees, interest, and penalties, prompting Hennepin County to seize Geraldine’s property, according to the Pacific Legal Foundation.
Instead of returning the surplus profits on the $40,000 sale, the county kept the additional $25,000 above her debt. The county claims forfeiture is not “a source of profit.”
“[F]actoring in all costs, the County’s program does not manage to break even,” Hennepin County Assistant County Administrator Dan Rogan told the DCNF. “Hennepin County works very hard to help anyone who wants to avoid forfeiture. Taxpayers may avoid forfeiture by paying their taxes, selling their property to recoup any equity, or by agreeing to a payment plan. Senior citizens may also participate in the Senior Citizens’ Property Tax Deferral program, which caps seniors’ property tax payments.”
“When owners ignore all of these options, the legislature has chosen to protect the public from further harm by transferring title to the government–without sending a check to the former owner. The taxpayers should not be the default realtor, property manager, and auctioneer,” Rogan continued.
The Eighth Circuit affirmed the lower court’s dismissal of Geraldine’s case in 2021, denying her claim that taking surplus equity was an “unconstitutional excessive fine and a violation of substantive due process.”
“If the Supreme Court doesn’t put an end to this unjust and unconstitutional practice, thousands more could lose their homes and entire life savings over much smaller property tax debts,” Deerson said.
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