Supreme Court to review tax foreclosure case that challenges home equity theft

Washington, D.C.; January 13, 2023: The U.S. Supreme Court announced today that it will hear a 94-year-old woman’s case challenging the constitutionality of laws that allow local governments to take all the value of a home as payment for much smaller property tax debts.

“Home equity is property protected by the Constitution,” said Christina Martin, senior attorney at Pacific Legal Foundation. “When the government takes more than it is owed in taxes, that’s home equity theft. We are thrilled the Supreme Court will hear this case, which we hope will end unconstitutional home equity theft across the country.”

More than a dozen states engage in home equity theft. [See the map.] Pacific Legal Foundation has found that homeowners across the United States lost more than $777 million in life savings on more than 5,600 homes, above what they owed in tax debt. On average, homeowners lost 86 percent of their equity.

Geraldine Tyler owned a modest one-bedroom condo in Hennepin County. But she was harassed and frightened near her home, so she moved to a new apartment in a safer neighborhood. Unfortunately, the rent on her new apartment strained her budget, and Geraldine fell behind on her condo’s property tax bills, amassing approximately $2,300 in taxes owed, plus $12,700 in penalties, interest, and costs.

To collect the $15,000 debt, Hennepin County seized Geraldine’s condo, valued at $93,000, and sold it for $40,000. The government kept every penny — a windfall of approximately $25,000. When Geraldine sued to vindicate her property rights, a federal district court dismissed her case, and the Eighth Circuit affirmed, holding that the government is free to redefine Geraldine’s private property as public property.  The case is Tyler v. Hennepin County.

Geraldine Tyler is represented free of charge by Pacific Legal Foundation, which works to end home equity theft in the states where it’s practiced.