Frequently asked questions about Tyler v. Hennepin County

March 22, 2023 | By PLF
Geraldine Tyler smiles for the camera

What is home equity theft?

Home equity theft happens when the government takes your home to recover a property tax debt worth less than the property, and refuses to compensate the owner for the difference between what was owed and what was taken.

Government can take property to collect unpaid property taxes, but taking more than it is owed is home equity theft, and that’s unconstitutional.

What are the facts of this case?

Geraldine Tyler, a grandmother in Minneapolis, failed to pay her property taxes of $2,300. The government started tacking on thousands of dollars in interest, fees, and other penalties until her total bill reached $15,000. When Tyler failed to pay the debt, Hennepin County, Minnesota, seized her condo and sold it at auction for $40,000. Instead of keeping the $15,000 owed and refunding Geraldine the sale surplus, the county kept all $40,000, essentially pocketing a $25,000 windfall at Ms. Tyler’s expense.

When will the case be argued in the Supreme Court, and when will its decision be issued?

The Court will hear the argument in Tyler v. Hennepin County on April 26, 2023, with a decision to come sometime afterward, likely in June 2023. This will be the last Supreme Court case heard this term.

What is the legal question?

There are two questions before the Court: (1) When the government forecloses on a home for unpaid taxes and retains the surplus equity, has it committed an unconstitutional taking without just compensation in violation of the Fifth Amendment? and (2) By taking far more than was due, has the government imposed a fine subject to the Eighth Amendment’s excessive fines clause?

You have a takings and excessive fines claim. Can you explain the difference between the two?

The Fifth Amendment says that when government takes private property for public use, it must pay just compensation. When the county took Tyler’s equity beyond the amount needed to satisfy the debt, it took her property and must compensate her for it.

The Eighth Amendment forbids excessive fines. When the county takes property of any value—even a home worth a million dollars—as a consequence of a person’s failure to pay just the smallest tax debt—even a single dollar—the disconnect between the amount owed and the property taken as a forfeiture should be considered a punitive fine subject to the excessive fines clause.

At a minimum, one of these claims protects Ms. Tyler, but we think both could apply. The government is taking more than it is owed without just compensation for this public purpose of debt collection, and the government is also doing it to deter undesirable behavior; therefore, the excessive fines should provide another layer of protection.

Do you need to win on both constitutional claims?


Who is generally harmed by home equity theft?

Pacific Legal Foundation research shows that home equity theft predominantly occurs in lower-income and minority areas. See Minnesota neighborhoods most impacted by HET. Older adults also face a disproportionate risk of falling victim to home equity theft. See AARP’s amicus brief in support of Geraldine Tyler.

What’s the size and scope of the problem?

Home equity theft is legal in 12 states and DC and robbed homeowners of nearly 9,000 homes and more than $860 million in life savings from 2014 to 2021.

While we only have scratched the surface, Pacific Legal Foundation looked at seven years of data and identified 8,950 seized and sold homes that amounted to $860 million in life savings lost to home equity theft. See report.

What happens if the Supreme Court decides in favor of Geraldine Tyler?

First, a victory at the Supreme Court, in this case, would affirm that home equity theft is wrong and unconstitutional. Local governments around the country will no longer be allowed to pocket surplus proceeds from tax forfeitures, and from now on, they’ll be compelled to return that money to property owners.

For Geraldine Tyler, a Supreme Court victory on the takings question means her case will be remanded, and she will be entitled to recover the amount of equity she can prove is rightfully hers. If she wins on the excessive fines question, her case would be remanded to determine whether the amount of the forfeiture above and beyond the penalties already rolled into the $15,000 tax debt was excessive. The amount of a fine found to be excessive would be returned to her.

Why should Americans care about this case?

Because the government shouldn’t be allowed to take more than what it is owed and does not have a license to violate your constitutional rights. Home equity is private property and, therefore, just as protected by the Constitution as a home or land.

Delinquent property taxes neither wipe out equity nor relieve the government’s obligation to pay just compensation. Property rights do not evaporate simply because you owe the government money or because the state passes a law declaring that the property interest doesn’t exist.

If Tyler wins, will it inhibit states’ and localities’ ability to settle tax debts via foreclosures?

No. The government will still be able to collect the tax debt, just not any extra amount that rightfully goes to the homeowner.

What would a loss at the Supreme Court mean?

A loss would allow states to continue to keep surplus proceeds from tax forfeitures.