In Isabellas County, Michigan, the Pung family lost its ranch style home due to a mere $2,242 in disputed taxes.
The country government sold the place for $76K at a public auction. The buyer then flipped it for $195,000.
I'm a recovering anarcho-capitalist, so I will try not to go on too much of a bender about how much this sucks. But boy is the world of property taxation and enforcement offering up a delicious cuba libre to someone who is trying to get with the twelve steps, here!!!
In May 2023, U.S. Supreme Court ruled unanimously in Tyler v. Hennepin County that home equity theft is unconstitutional. The Court determined that seizing excess value over a tax debt violates the fifth amendment's taking clause.
So was Pung simply a straightforward application of Tyler? No such luck.
Lower courts essentially gave the Pungs the difference between the tax debt and the public auction value. But the Pungs asked the Supreme Court to affirm that (as that radical 'flip' would indicate) the auction value was well below true market value and they were entitled to the latter.
The Supreme Court refused to do this. Justice Alito (pictured above) writing for the court said the tax sale value will be treated as the market value for purposes of Tyler so long as the tax sale is "fairly conducted in light of our country's history of tax sales." The case was remanded for litigation over that caveat.
Justice Thomas concurred in the opinion, but wrote a lengthy separate opinion that makes it clear on what lines he thinks the Pungs' counsel ought to continue to litigate the matter. And he writes, "regardless of when exactly the history of tax foreclosure sales can justify a departure from [otherwise applicable rules], my initial impression is that it cannot do so in this case."
Put a pin in this one. There is a need for reform on the tax foreclosure system inclusive of tax auctions. They are not the solution, they are part of the problem. Continued litigation by the Pungs may yet bring us to such reform.
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