94-year-old Geraldine Tyler lived alone in a condo and then rented an apartment in a senior community. Now she’s before the Supreme Court and her case could change property law around the country. 

The justices heard oral arguments Wednesday, April 26, about Ms. Tyler’s home that was foreclosed on in Minnesota. But there are thousands of cases just like hers around the country. 

Back story

Ms. Tyler stopped paying taxes when she moved out of her condo in 2010. That eventually added up to $15,000 in taxes, fees and other costs. The county seized her property, sold it for $40,000 and kept what she owed, plus the additional $25,000 as a windfall. Although the county argues there was nothing left when they add in all of their expenses, including paying leftover HOA fees and the cost of getting the condo ready for sale.

“This court in Texaco made clear that when a property right is extinguished, due to an owner’s failure to comply with reasonable conditions on ownership, there is no taking that requires compensation,” Neal Kumar Katyal, the lawyer representing Hennepin County, said during his opening statement. 

It’s legal in Minnesota and a dozen other states for the local government to take absolute title of properties and keep all of the owner’s equity in exchange for canceling the debt. But Ms. Tyler doesn’t think it’s right.

“Certainly the government can tack on penalties interest in fees and they can forcibly sell it and take their cut. But when you just attempt to take everything leftover after that, that’s taking,” Christina M. Martin, an attorney with Pacific Legal Foundation told the justices.  

The legal questions

Lower courts have ruled against Ms. Tyler. Now the justices will answer two questions: 

1. Whether taking and selling a home to satisfy a debt to the government, and keeping the surplus value as a windfall, violates the Takings Clause of the Fifth Amendment, which requires just compensation be given to property owners. 
2. Whether the forfeiture of property worth far more than needed to satisfy a debt plus, interest, penalties, and costs, is a fine within the meaning of the Eighth Amendment – which prohibits excessive fines. 

Questions from the justices

Multiple Justices asked when a property could be considered abandoned, given Ms. Tyler hadn’t paid taxes on the condo for five years and was not living there. 

“But if some state wanted to just say you know we have a rule, you don’t pay taxes for five years, you’re not living there, we’re going to consider the place abandoned,” Justice Elena Kagan asked lawyers for Ms. Tyler. 

“I think that would still be problematic, Your Honor, because there’s a lot of reasons why people don’t pay their property taxes and a lot of reasons why people move out. We’ve seen examples of people who are moved into nursing homes and have all sorts of unfortunate circumstances,” Martin responded. 

Home equity theft

Ms. Tyler, and others in her situation, are being represented by the Pacific Legal Foundation (PLF). According to the organization’s data, 11 states foreclosed and sold 8,950 properties from 2014 to 2021. Available data for 6,200 of those homes showed that when the governments sold them, they collectively received $860 million more than the taxes that were owed. PLF describes it as home equity theft. It’s an issue that has united many organizations, including PLF and AARP. 

The justices will release their decision in the case by June.