The U.S. Supreme Court on Thursday ruled unanimously in favor of a 94-year-old woman who argued that she was entitled to some of the profits from the sale of a condominium for which she owed taxes and penalties to Hennepin County — a decision likely to result in changes to Minnesota's property forfeiture laws.
Geraldine Tyler had sued the county, saying officials had unconstitutionally kept profits from the sale of her home after seizing it to cover her tax debt. A district judge dismissed her lawsuit for lack of cause, and the Eighth Circuit Court of Appeals affirmed his decision.
But Supreme Court justices who heard Tyler's case ruled 9-0 that Hennepin County violated a constitutional clause that requires the government to give people "just compensation" when seizing their property.
"A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed," Chief Justice John Roberts wrote in the court's opinion, which noted that the principle that a government may not take from a taxpayer more than is owed dates back at least to the Magna Carta.
"The taxpayer must render unto Caesar what is Caesar's, but no more," Roberts wrote.
Tyler was represented by Charles R. Watkins of Guin, Stokes & Evans, LLC, Garrett Blanchfield and Roberta Yard of Reinhardt, Wendorf & Blanchfield, and Vildan Teske of Teske Law, PLLC. They were joined on appeal by Pacific Legal Foundation, a nonprofit interested in furthering "limited government, property rights & individual rights."
"Today's decision is a major victory for property rights in the United States," said Pacific Legal Foundation attorney Christina Martin, who argued the case before the high court. "This decision affirms that property rights are fundamental and don't depend solely on state law. The court's ruling makes clear that home equity theft is not only unjust, but unconstitutional."
"I'm happy about what this win will mean for a whole lot of people, but especially seniors who would otherwise lose their savings and be put out on the street," Tyler said in a statement issued through her attorneys.
The case, Tyler v. Hennepin County, centered around a Minneapolis condo that Tyler bought in 1999. In 2010, after her family decided she would be safer in a senior community, Tyler moved. Afterward, the condo's property taxes went unpaid.
Tyler amassed $2,300 in unpaid tax debt by 2015. It eventually ballooned to $15,000 because of interest and penalties. The county seized her condo and erased the debt after selling it for $40,000. State law allows officials to split profits from such sales among the county, city and local school district.
County Auditor Dan Rogan said in a statement that based on Thursday's decision, changes will be made to Minnesota's tax forfeiture laws.
"Hennepin County represented the interests of Minnesota and many other states with laws that transfer title of abandoned property to reduce the burden to the public," Rogan said. "Counties in Minnesota have faithfully administered the state's property forfeiture laws for well over a century. Based on today's decision which found Minnesota's law unconstitutional, Minnesota's property tax forfeiture laws must be revised.
"Hennepin County will work closely with the Minnesota Legislature to create a process that is consistent with the Supreme Court's decision."
The Pacific Legal Foundation reports that at least a dozen states have similar laws allowing local governments to seize property for unpaid taxes. Such laws have affected nearly 9,000 homes and led homeowners to lose more than $860 million in life savings, the foundation says.
Its data suggests that hundreds of Minnesotans are in similar situations, with local governments selling at least 1,350 homes from 2014 to 2021.
"Economic penalties imposed to deter willful noncompliance with the law are fines by any other name," the Supreme Court's opinion read. "And the Constitution has something to say about them: They cannot be excessive."
Pacific Legal said Tyler's case will now return to trial court. Her attorneys are expected to argue that she's owed the fair market value of the condominium, minus her debt. The nonprofit also plans to demand legislative changes from states whose laws violate Thursday's Supreme Court decision.
"States that neglect to follow [Pacific Legal's] guidelines for reform may be subject to liability in takings lawsuits," the foundation said in a statement.