Supreme Court Overrules Local Governments For Seizing Homes

Authored by Matthew Vadum via The Epoch Times (emphasis ours),

The U.S. Supreme Court reversed court rulings in which local governments seized two homes over unpaid tax debts and kept sale proceeds that far exceeded the tax owed.

Critics call the practice “home equity theft.”

The case came after Pacific Legal Foundation (PLF), which represented the homeowners in both cases, released a report late last year saying that 12 states and the District of Columbia allow local governments and private investors to seize dramatically more than what is owed from homeowners who fall behind on property tax payments. PLF is a national nonprofit public interest law firm that takes on governmental overreach.

The U.S. Supreme Court released unsigned orders (pdf) on June 5 summarily reversing two rulings of the Supreme Court of Nebraska.

The nation’s highest court did not explain why it was issuing the orders. No justices dissented.

The judgments of the Supreme Court of Nebraska were vacated and the cases remanded to that court “for further consideration in light” of the U.S. Supreme Court’s unanimous ruling in Tyler v. Hennepin County on May 25.

In that decision, the U.S. Supreme Court ruled that a Minnesota county wronged a 94-year-old grandmother when it forced the sale of her condominium over an unpaid tax debt and kept the sale proceeds that far exceeded the tax she owed.

Geraldine Tyler owned a modest one-bedroom condominium in Hennepin County, but after she was harassed and frightened near her home, she moved to a new apartment in a safer neighborhood. The rent on her new apartment stretched her resources and she fell into arrears on her condo’s property tax bills, accumulating about $2,300 in taxes owed, along with $12,700 in penalties, interest, and costs.

The county seized Tyler’s condo, valued at $93,000, and sold it for just $40,000. Instead of keeping the $15,000 it was owed, the county retained the full $40,000, amounting to a windfall of $25,000.

Tyler sued, arguing that the government violated the Takings Clause of the Fifth Amendment by seizing property in excess of the debt. Her lawsuit was rejected by the courts, including the U.S. Court of Appeals for the 8th Circuit, which found that the legal forfeiture of the property extinguished the owner’s property interest.

But the county went too far in keeping the windfall, the U.S. Supreme Court held.

The principle that a government is not allowed to take from a taxpayer more than she owes is based in English law and goes back at least as far as the Magna Carta of 1215. And Supreme Court precedents have long recognized that a taxpayer is entitled to the surplus in excess of the debt owed, the court stated at the time.

“The Takings Clause ‘was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,’” Chief Justice John Roberts wrote for the court.

“A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed.”

On June 5, the U.S. Supreme Court simultaneously granted the petitions of Kevin and Terry Fair and Sandra Nieveen seeking review while skipping over the oral argument phase when the merits of the case would have been considered.

Some lawyers call this process GVR, which stands for grant, vacate, and remand.

Critics say this process is part of the so-called shadow docket, which they say lacks transparency.

In Fair v. Continental Resources (court file 22-160), Kevin and Terry Fair’s $60,000 home was taken by Scotts Bluff County, Nebraska, and Continental Resources for a $5,200 tax debt, according to the Fairs’ petition.

Under the state’s tax foreclosure statute, the county extinguished the couple’s interest in the home by conveying full title to Continental without holding an auction and without any opportunity for the couple to recover their equity.

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