Protecting Civil Rights

Pacific Legal Foundation’s Supreme Court Victory Sets Landmark Property Rights Precedent

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Photo courtesy of Pacific Legal Foundation

When local authorities seized Geraldine Tyler’s Minneapolis condo in 2015 and sold it to private investors, they didn’t keep only the $15,000 the now 94-year-old grandmother owed in property taxes and fees. They also pocketed the remaining $25,000, stealing her home equity and wiping out the funds that could have been used to pay for Geraldine’s care at the senior living facility where she then resided.

Tragically, the victimization of Geraldine at the hands of local officials is far from an isolated case. At the time, Minnesota was one of 19 states, plus Washington D.C., that allowed this kind of action, known as “Home Equity Theft.”

That situation will soon be changing, however, thanks to the work of Atlas Network partner Pacific Legal Foundation (PLF), who in 2023 secured a unanimous ruling in the Supreme Court that bans Home Equity Theft like what Geraldine suffered.

Taking on her case pro bono, the public interest law firm PLF argued that property tax forfeiture does not relieve the government of its responsibility to pay just compensation and that taking more from the taxpayer than is owed amounts to property theft, in this case, home equity. PLF maintained that the $25,000 surplus on the condo sale should have been remitted to its former owner.

“If the government takes your property for public use, it owes you money,” said Tyler’s attorney, Joshua Polk.

The Supreme Court ruled that Tyler's constitutional rights were violated. This included rights under the Fifth Amendment's Takings Clause were violated. and the Eighth Amendment's Excessive Fines Clause. And while the Supreme Court did not decide whether the government also violated the Eighth Amendment's Excessive Fines Clause, Justice Gorsuch, joined by Justice Jackson, wrote an opinion that will be helpful to advocates seeking to enforce the Excessive Fines Clause's protections.

The precedent-setting win in Tyler v. Hennepin County represents a key victory for property rights in states like Minnesota where such constitutional safeguards were not in place and enforceable at the county level. According to PLF, more than 4,300 properties were seized for delinquent taxes in the state, including over 1,200 family homes. On average, the taxes and interest represented just eight percent of the equity in the forfeitures and subsequent sales—estimated to total $118 million in government equity theft statewide.

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Geraldine Tyler (center) with her family. Photo courtesy of Pacific Legal Foundation.

Such forfeitures, PLF notes, unduly affect elderly and minority populations as they often lack sufficient resources to challenge government legal teams. Often the accumulated tax debts are for reasons out of the homeowner’s control, as was the case for Tyler. For example, some victims of Home Equity Theft suffer from medical issues that make it difficult for them to stay on top of bills, including tax notices. Further, some no longer reside at the residence in question, and notices sent there are not received by the homeowner. In Tyler’s case, she was a resident at a senior’s complex.

The case of Kevin Fair, another PLF client, is also bolstered by the Tyler decision. When Fair couldn’t pay his property taxes due to his wife’s medical bills, the state of Nebraska seized and then sold his home without providing him with the equity surplus. Although he lost his case in state court and on appeal to the Nebraska Supreme Court, PLF sought review by the U.S. Supreme Court review, which was delayed due to Tyler’s case. Now, Kevin Fair can fight for his constitutional right to just compensation.

Indeed, Justice John Roberts stressed the importance of preventing the state from unduly benefiting from seized private property. “The taxpayer must render unto Caesar what is Caesar’s,” Roberts wrote. “But no more.”

Pacific Legal Foundation’s work on the Tyler case was supported, in part, through grants and professional development opportunities from Atlas Network. Now, PLF is working with a number of other Atlas Network partners to ensure that legislative reforms are adopted across the 19 states and the District of Columbia that still allow Home Equity Theft, bringing them in line with the Tyler decision. Legislation is advancing in South Dakota, New York, and Nebraska, signaling a wider trend toward eliminating Home Equity Theft nationwide.

PLF is committed to making sure all 50 states not only have the proper legislation on the books but also that it is enforced down to the county level. Many jurisdictions will likely be unwilling to comply with the Tyler decision of their own accord for the same reason they pursued Home Equity Theft in the first place: they like pocketing the proceeds.

“The reason why the local governments are engaging in this process is because they’re able to make money,” Polk said.

“The decision is a major victory for property rights in the United States,” said PLF attorney Christina Martin. “This decision affirms that property rights are fundamental and don't depend solely on state law. The Court's ruling makes clear that Home Equity Theft is not only unjust but unconstitutional.”