A property rights test case is being filed by the grandma who didn’t pay taxes

The Minneapolis woman whose condo was stolen by Hennepin County, Minnesota, for failure to pay property taxes: The case of Geraldine Tyler

The U.S. Supreme Court hears arguments Wednesday in the case of a 94-year-old Minneapolis woman whose condominium was seized by Hennepin County for failure to pay property taxes. At issue is the way at least a dozen states handle the sale of homes to pay off overdue taxes.

Geraldine Tyler bought her condo in Minneapolis in 1999 and lived there until 2010, when, at age 81, she moved to a senior assisted-living center at the urging of her children. She didn’t pay taxes on the condo after that. Tyler does not dispute that the county warned her to pay if she didn’t. She owed $15,000 in taxes, interest and fees in one year.

The condo was sold at an auction for $40,000 and was taken over by the county. But, like at least a dozen other states, it didn’t pay Tyler the surplus from the sale.

Represented by the Pacific Legal Foundation, Tyler subsequently went to court, contending that by keeping the excess, the county had unconstitutionally taken her property.

Rebecca Holschuh says that the county doesn’t make a profit. The county doesn’t break even through the taxation laws.

Holschuh notes that there are a variety of ways that homeowners can avoid forfeiture. The state has a payment plan that allows people to pay what they owe over a 10-year period. There’s a program that allows seniors to pay no more than 3% of their income.

The county wouldn’t prefer to be a default real estate agent. It doesn’t want abandoned homes that bring down property values and it doesn’t want to spend money to make a property sellable.

“And really, if somebody wants to pull their equity out of property, the best way for them to do that is to sell the property themselves,” Holschuh said.

Whoever is right, nobody disputes that losing a home can be devastating for families. Homeowners have horrible tales to tell in other parts of the country.

Tawana Hall and her husband moved out of Detroit to Southfield, Mich., bought a rundown house and began fixing it up. But the couple fell behind on tax payments, enrolled in a tax payment plan and then fell behind again. The city took possession of the home and sold it for $1 to a developer who promptly sold it for $300,000.

“It’s a rollercoaster ride,” Hall said. “You put a lot into it. Our forever home was supposed to be our children’s home and we had to move back into the city. it was a lot and, you know, it’s just overwhelming.”

Property forfeitures and the Supreme Court: Does a property tax forfeiture violate the First Amendment under the Constitution of the United States? A lawyer for the Pacific Legal Foundation

The people most often harmed by these property forfeitures for back taxes are the “elderly, sick, or the vulnerable and unsophisticated,” according to Martin, the lawyer for the Pacific Legal Foundation.

That said, this is the first time that the Supreme Court has directly considered whether a property tax forfeiture, something that the court has long upheld, can be considered a taking under the Constitution. If it is, that poses other questions: Would the county have to maximize the sale price, not just put the property up for public auction? What if the property wasn’t for sale and nobody wanted to buy it? What if there were competing claims on the property?

County and local government associations have filed briefs contending that such a system would add to urban blight while crippling local government property tax collection, the very system that finances local schools, fire and police protection, safe drinking water and much more.

Since Minnesota is one of 20 states that handles the sale of such properties without sharing the proceeds with previous owners, the case is important.

John Roberts mentioned that some states did have laws that were similar to Minnesota’s.

Justice Sonia Sotomayor followed up by asking, “OK, here you have a debtor who basically doesn’t want to do anything. What should the county do to protect itself?

Justice Samuel Alito turned to a similar issue. He pointed out that some cities will put the proceeds from the sale of the car into the city’s general fund if the owner doesn’t pay taxes or tickets. “Would that be unconstitutional in your view?” he asked.

Lawyer Martin stated that the history of tax collection or debt collection from the government was pretty uniform on the question of personal property.

The Minnesotan whose condo was sold over a water bill: What’s the point of the takings clause? The case of Neal Katyal

But if these appeared to be difficult questions, they were nothing compared to the increasingly overt hostility faced by lawyer Neal Katyal, representing Minneapolis’ Hennepin County.

She had said she wanted “nothing to do” with the condo, so that is something like this case, said Katyal. That, he said, constituted an abandonment of the property.

The court was not happy when he referred to states like Minnesota that had laws at the time of the founding. Justice Neil Gorsuch felt like he had to say something when he cited the Statute of Gloucester.

“Tyler was not a vassal owing fealty to her lord but a modern-day simple owner of real property,” he intoned. I’m not sure what the history has to do with this case.

In Minnesota’s case, the court upheld the sale of a house for $7,000 over an unfulfilled $65 water bill, according to the justices.

“What’s the point of the takings clause?” Chief Justice Roberts asked. “I mean that was something that was pretty important to the framers. Why did they put that in there?

If we read the Constitution to exclude real property, why wouldn’t we? That seems very counterintuitive.”

Most states have mechanisms in place to give money back to homeowners, according to Jackson. “So what is the biggest practical problem that we would face?”