Posted on 04/27/2023 2:42:56 PM PDT by nickcarraway
A win for Geraldine Tyler, who is now 94 years old, would be a win for property rights.
The Supreme Court on Wednesday heard arguments in a consequential case. The query before the justices: Was it unconstitutional when the government seized a woman's home over an unpaid tax bill, sold it for more than the amount of the debt, and then kept the profit?
It may sound like a slam dunk case. Over the last several years, it has not been. But yesterday's arguments provided both a glimmer of optimism for the state of property rights in the U.S., as well as a glimpse into how far the government will reach to defend its ability to violate those rights.
In 2010, Geraldine Tyler, who was in her early 80s, vacated her condominium in Hennepin County, Minnesota, after a series of local events, including a nearby shooting, left her wanting a safer environment. She was ultimately unable to afford both her new rent and her condo's property taxes, racking up a $2,300 overdue bill. Local officials added $13,000 in interest, penalties, and assorted fees. They then seized her home, sold it at auction for $40,000, and pocketed the remaining $25,000 surplus.
Multiple federal courts ruled against Tyler, who is now 94 years old, prior to her case's ascension to the Supreme Court yesterday. "Where state law recognizes no property interest in surplus proceeds from a tax foreclosure-sale conducted after adequate notice to the owner," wrote Judge Steven Colloton of the U.S. Court of Appeals for the 8th Circuit, "there is no unconstitutional taking."
That decision came down in February 2022. Christina M. Martin, a senior attorney at the Pacific Legal Foundation, sought to disabuse the high court's justices of that argument. "The county could have collected the debt without violating the Constitution by following the traditional common law rule still followed in most states and still followed in Minnesota in nearly every other debt collection circumstance," said Martin, who is representing Tyler. "Under that rule, the county should have taken the property, sold it, paid the debts from the proceeds, and refunded the remainder to Ms. Tyler. Instead, the county took everything."
It's a line of thinking the Court appeared receptive to. That became especially apparent when the justices questioned the attorney representing Hennepin County, Neal Katyal, who primarily invoked historical tradition to defend the county's right to steal Tyler's home equity.
"Are there any limits on that?" asked Justice Elena Kagan. "Take a $5,000 tax debt and a $5 million house, and the state says, thanks, we'll keep it." Katyal danced around the question until Justice Neil Gorsuch demanded a reply: "A $5 property tax, a million dollar property, good to go?" he asked.
Katyal responded that, yes, in effect, that was good to go.
It's not a hypothetical that requires an active imagination. After Tawanda Hall fell behind on the property taxes for her home in Oakland County, Michigan, the government sold it for more than $300,000, satisfied the tax burden, and kept the profit—which totaled over $286,000. "[I was] running around trying to find out who can I talk to, what can I do to stop this from happening?" she told me in January. "There was really no one there to work with us or help us or even tell us what route to go."
But it was history that Katyal primarily relied on, citing, among other things, the Statute of Gloucester, which was passed in 1278 by English Parliament. "The Statute of Gloucester was about lands owned by the feudal lord and what happens when a vassal fails to provide enough wheat to his lord and can his lands, which really belong to the lord, escheat to the lord," said Gorsuch. "And I just don't understand what on earth any of that history has to do with this case."
Kagan later echoed that: "If the mind rebels at the notion that the government can seize your $100,000 bank account and not give you back the $90,000 that you don't owe…why should…what was going on in 1200 or what was going on in 1776 change anything about that?"
Katyal also furnished a 1790 Virginia statute in making his case. When Justice Clarence Thomas inquired as to whether there was any example where it was used in a way similar to Tyler's, where the government kept the profit, Katyal replied that he had not looked for a formal case in which that had happened.
Of his inability to find a similar case, Thomas later said, "That's perhaps because [the statute] was never applied in the way that you suggest."
The core of Katyal's argument hinged on the idea that Tyler's property rights were "extinguished" when she fell behind on her taxes. It would seem that, at the least, the justices did not appear moved by that. "There were lots of great questions from the Court today," said Martin in a statement to Reason. "I hope that the Court will issue a decision holding that it is unconstitutional for the government to take more than it is owed."
An exchange toward the end of the oral arguments perhaps best epitomized Katyal's argument and the trouble it faced. Justice Amy Coney Barrett asked if the state would be justified in seizing someone's car over $20 of unpaid parking tickets. Katyal said no, because there "is no tradition that goes back that could be looked to."
"Well, there weren't cars then," Barrett replied.
I doubt the court will uphold this.
There is no reason this should be at the supreme courts. The fact lower courts upheld theft by government then how far are we away from death by government bureaucrats.
“Under normal circumstances in most states, the property owner is entitled to keep any equity in the property that remains after a bank or tax authority seizes it in a foreclosure and pays off the expenses associated with seizing and selling it. In effect, the bank or government can’t make a profit off.” the transfer.”
In many states, there is also a redemption period after the property is sold at public auction, when the origibal owner can buy the property back from the purchaser for auction price.
Yes there is. It was posted here yesterday with some good analysis. The laws in Minnesota are not on her side. The Supreme court will likely not rule in her favor.
That would help.
Yeah, liens or something like that. With maybe more recourse if it drags on for decades. I also don’t want to reward people for building up a huge unpaid tax bill.
She lived in a dangerous area and decided to move.
Was she incompetent?
You might remember what was going on in 2010 with property values. The condo would not sell at anywhere near it's later value.
Seems to me I have seen this in the news before.
Probably. It has been reported on in the past 13 years.
There is more to this story.
Yes.
Lots of greedy sobs in government decided to jack up property taxes as property was losing it's value. And people were losing their jobs.
This allowed Them to take property, sell it and keep the proceeds.
Not sure why anyone would think that was acceptable. Private lending companies can not do it. They have to hand over anything beyond what they were owed.
But government, well after all it should all go to them anyway. Right?
It’s not really a free country.
And now less than $630 to reach 30% in our freepathon!
04/27/23 | Jim Robinson
Posted on 4/27/2023, 3:26:37 PM by Jim Robinson
Let’s get ‘er done!
NO RESPONSES YET! SHAME!
This situation was an Abandonment of the property under the statute.
Now exactly why would she do this.
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Thank you for you lovely answers. The question is why did she not act responsible to the situation.,
Not everything is someone else fault.
The sovereign can do whatever they d@m well please. You never own anything, the govmnt does. Quit paying tribute and see how fast the real owners throw you out.
Well, that’s a bit different. Thanks for the background info.
And what crackheads on the lower courts upheld this, either on the basis of fundamental equity or getting laughed out of SCOTUS??
Liens are placed I am sure. And sure, they don’t want to incentivize delinquencies. But after several years this lady owed about $2k. Not worth all the trouble. It is (at least in my state) a small claim and there are small claim courts. Yeah if you ran up unpaid taxes worth a considerable portion of the value of the property then it would seem more reasonable. But in this case the debt before interest and fines was something under 5% of the price the state sold it for (I don’t know the value if it were marketed and sold). That’s a lot of bureaucrats shuffling a lot of paper for a small amount of money.
I suspect the lady bought the condo for a very low price decades ago. She was probably paying a low tax based on the purchase price. When the county re-sells it the tax gets re-assessed at the higher valuation. So the county makes out 2x - they keep the profit, and get to revalue the property and tax the new owner at the higher valuation.
“In June 2018, however, the county suddenly transferred the property to the city of Southfield, which had a preferential right to buy foreclosed properties for the price of the debt. “
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