How many states allow the sale of private property to satisfy unpaid local taxes? Just about all of them, presumably.
But how many states, after property is sold for taxes, allow local governments to keep the entire proceeds of the sale instead of just the amount of the unpaid tax bill? About a dozen of them, it turns out — until last week, when the U.S. Supreme Court said that’s unconstitutional.
The court ruled unanimously that a county in Minnesota violated the rights of a condominium owner by taking her property without paying “just compensation,” which is required by the “takings clause” in the Fifth Amendment.
A Minneapolis woman, now 94 years old, owned the one-bedroom condo until 2015, when the county took title to it for unpaid taxes. She had not paid $2,300 in property taxes — why she stopped paying is unclear — but interest and penalties increased her total bill to $15,000.
The county sold the condo a year later at public auction for $40,000 and kept all the money. The Supreme Court said the county should have sent the extra $25,000 above the tax bill to the former owner.
The Liberty Justice Center, which filed a brief in the case supporting the former condo owner, said that common law, dating back to the Magna Carta in 1215, requires the government to return excess money to a property owner after a debt had been repaid.
Chief Justice John Roberts repeated this in his ruling. He also cited English law and Supreme Court precedents in writing, “a government may not take more from a taxpayer than she owes.” He was even more direct at the end of his opinion: “The taxpayer must render unto Caesar what is Caesar’s, but no more.”
The broader picture is interesting, too. The Pacific Legal Foundation, a non-profit public interest firm that focuses on property rights, represented the former condo owner in the Supreme Court case.
It said that in the 11 states plus the District of Columbia that allowed governments to keep the full amount of a property sale even if it exceeded the taxes owed, at least 8,950 homes were sold for unpaid taxes between 2014 and 2021. Former owners received little or none of that money — though the Pacific Legal statement did not specify how many of those sales were for a larger amount than the unpaid taxes.
The county contended that the owner could have sold the condominium before it got seized for taxes. That certainly is true, since she reportedly moved out of the condo in 2010.
Lower courts, perhaps relying on Minnesota law, had sided with the county. The U.S. 8th Circuit Court of Appeals unanimously ruled for the county, saying that if state law recognizes no property interest in a surplus from a tax sale, “there is no unconstitutional taking.”
The Supreme Court’s ruling, though, showed once again that the U.S. Constitution overrides state laws — properly so in this case.
— Jack Ryan, McComb Enterprise-Journal
