Supreme Court Clarifies Tax Foreclosure Compensation in Pung v. Isabella County Decision
The U.S. Supreme Court, in its decision on Pung v. Isabella County, clarified that when a government forecloses on real property for delinquent taxes and sells it at auction, the former owner is constitutionally entitled to the surplus proceeds generated by the tax sale, not the property's hypothetical fair market value. This ruling builds upon the 2023 Tyler v. Hennepin County decision, which established that the government cannot retain value beyond what is owed in taxes. In Pung, the family owed $2,241 in property taxes, and their home, assessed at $194,400, was sold for $76,008 at auction. The estate argued for compensation based on fair market value. The Court rejected this, stating that the constitutional measure of retained value, in a fairly conducted tax sale, is the auction surplus. Justice Sonia Sotomayor, joined by Justices Gorsuch and Ketanji Brown Jackson, authored a concurring opinion emphasizing that the Court did not define the full content of a 'fair auction,' leaving room for future chal...