The Supreme Court sided with a 94-year-old grandmother who sued a Minnesota county government after it sold her home over unpaid tax and pocketed the profits.
In a unanimous decision handed down on Thursday, the justices ruled that Hennepin County had violated the 5th Amendment’s prohibition on seizing private property when it sold Geraldine Tyler’s $40,000 condominium in 2015 over an unpaid $15,000 tax bill.
“The County had the power to sell Tyler’s home to recover the unpaid property taxes. But it could not use the toehold of the tax debt to confiscate more property than was due,” Chief Justice John Roberts said in a written opinion.
“The taxpayer must render unto Caesar what is Caesar’s, but no more.”
Ms Tyler’s home was seized over a $2,300 unpaid tax bill, which had soared to $15,000 with interest and penalties.
She appealed the state forfeiture laws that allowed the county to keep $25,000 in surplus profits.
Ms Tyler took the case to the Supreme Court in April after lower courts ruled against her.
Attorneys from the Pacific Legal Foundation who represented the grandmother celebrated the decision as an important victory for property rights.
“This decision affirms that property rights are fundamental and don’t depend solely on state law,” Christina Martin said in a statement.
“The Court’s ruling makes clear that home equity theft is not only unjust, but unconstitutional.”
Ms Tyler’s lawyers said she had fallen behind on property taxes after moving to an apartment for assisted senior living.
The case will now go to trial in a lower court for Ms Tyler to argue that she is owed the fair market value of her property, minus her tax debt.
Justice Roberts’ opinion stated that Minnesota law “recognises in many other contexts that a property owner is entitled to the surplus in excess of her debt.”
“If a bank forecloses on a mortgaged property, state law entitles the homeowner to the surplus from the sale.
“And in collecting past due taxes on income or personal property, Minnesota protects the taxpayer’s right to surplus,” his decision said.
Justices Neil Gorsuch and Ketanji Brown Jackson wrote in a concurring opinion that the law also supported Ms Tyler over the state taking excessive fines.
“Economic penalties imposed to deter willful noncompliance with the law are fines by any other name,” the justices wrote.
“And the Constitution has something to say about them: They cannot be excessive.”
The Pacific Legal Foundation said in a statement that more than a dozen states engage in “home equity theft”, costing homeowners more than $860m.