Court vindicates protections against NJ’s tax theft scheme

East Orange, New Jersey; June 30, 2025: A former East Orange property owner is celebrating after a New Jersey court ruled the City violated her rights by taking the equity she had in her commercial property. When Lynette Johnson accidentally fell behind on her property taxes, the City placed a lien on the property, ultimately taking it and selling it for $101,000—significantly more than the $4,787.76 she initially owed—and unlawfully kept the surplus.

In 2023, the U.S. Supreme Court ruled in Tyler v. Hennepin County that these kinds of tax schemes are unconstitutional, and last week the Appellate Division ruled that people have a right to the equity in their property even if their properties were foreclosed before the Tyler decision was announced.

“This ruling is a victory for property rights and a clear message to governments that they cannot profit from the misfortunes of their citizens,” said David Deerson, an attorney at Pacific Legal Foundation. “As the court affirmed, ‘The taxpayer must render unto Caesar what is Caesar’s, but no more.’ We are committed to ensuring Ms. Johnson receives the full compensation she is owed.”

From 2014 to 2020, more than $140 million was taken from property owners who found themselves in a situation like Ms. Johnson’s.

Lynette Johnson’s case is part of Pacific Legal Foundation’s work to end the egregious practice of equity theft and defend property rights.

The case is Johnson v. City of East Orange.