Supreme Court of the United States
The U.S. Supreme Court held that a claim under the Takings Clause had been presented where a Minnesota county seized a condo to sell for unpaid real estate taxes and retained the excess value over the owed tax debt for itself.
Geraldine Tyler owned a condominium in Hennepin County, Minnesota, and lived there for 15 years before her family moved her into an assisted living facility. The condo sat vacant and no one paid the real estate taxes owed, which accumulated to about $15,000 before the County seized the condo and sold it for $40,000, keeping the $25,000 excess over Tyler’s tax debt for itself.
Whether remaining value from a tax sale is property protected under the Takings Clause depends on state law, “traditional property law principles,” historical practice, and Court precedent. State law, alone, cannot be the only source of property rights because otherwise a state could sidestep the Takings Clause by disavowing traditional property interests. In this case, the Court found that history and precedent dictate that while the County had the power to sell Tyler’s home to recover unpaid property taxes, it could not use the tax debt to confiscate more property than was due. Doing so effected a “classic taking in which the government directly appropriates private property for its own use.” Even Minnesota law itself recognized in many other contexts that a property owner is entitled to the surplus in excess of her debt (for example, surpluses following a bank foreclosure of a mortgage, or collecting past due income or personal property). Minnesota may therefore not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when the State does the taking.