Active: Eighth Circuit appeal challenges state’s unconstitutional tax foreclosure system

As an elderly widow living alone, Geraldine Tyler was doing just fine in the one-bedroom condo she owned in Minneapolis. That is, until 2010, when a rise in neighborhood crime and frightening incidents near her home alarmed Geraldine and her family and prompted her hasty move to a safer area, where she rented an apartment. 

Once Geraldine moved, she could no longer afford the property taxes on her condo in addition to the rent on her apartment. The taxes piled up, and Tyler accrued a $2,300 debt. In 2015, when the total tax debt, including penalties, interest, and fees, was $15,000, Hennepin County, Minnesota, seized the condo and sold it one year later for $40,000. Instead of keeping the $15,000 it was owed and refunding Geraldine the sale surplus, the county kept all of the $40,000.  

State law allows Minnesota counties to keep such windfalls at the expense of property owners like Geraldine. From 2014 to 2020, some 1,200 Minnesotans lost their homes and all of the equity they held for debts that averaged 8% of the home’s value. 

The State and U.S. Constitutions protect property owners’ rights to just compensation and to be free from excessive fines. 

But when Geraldine sued to vindicate those rights, a federal district court dismissed her case, saying the very act of forfeiture wipes out an owner’s property interest. In other words, unlike most states, when owners lose their property to tax foreclosure, they have no property rights left to defend. 

Home equity is private property, however, and is just as protected as a home or land. Government can’t avoid its obligation to pay just compensation for a property’s equity by simply saying the home equity doesn’t exist. 

The county also violated the Excessive Fines Clause by keeping the additional $25,000 from the condo sale, which is far and above the $15,000 due. 

Now, at 92 years old and in an assisted-living facility, Geraldine is fighting back. Geraldine is appealing her case’s dismissal to end home equity theft in Minnesota and stop government from reaping windfalls at the expense of struggling property owners. Pacific Legal Foundation represents her free of charge with the assistance of Charles Watkins of Guin, Stokes & Evans, LLC, and attorneys at Reinhardt Wendorf & Blanchfield, and Teske Katz, PLLP. 

Minnesota is the latest state in PLF’s ongoing work to defeat home equity theft across the country. 

What’s At Stake?

  • Government can take property to collect unpaid taxes, but taking more than it is owed is legalized home equity theft.
  • Home equity is private property. Delinquent property tax forfeiture neither wipes out equity nor relieves government’s obligation to pay just compensation.

Case Timeline

August 19, 2022
Petition for Writ of Certiorari
United States Supreme Court
February 16, 2022
March 22, 2021