Scotus Blog: Justices to consider constitutionality of tax foreclosure sales in Mid-Michigan case
The argument next week in Pung v Isabella County asks the Supreme Court to consider the constitutionality of the longstanding practice of tax foreclosure sales, scotus blog said. The case challenges whether the government must pay the difference between an auction price and what the owner says was the property’s fair market value.
Scotus Blog: The facts at the center of the dispute
Michael Pung, executor of the estate of his nephew Timothy, declined to pay what Isabella County, Michigan, said were unpaid real estate taxes and the county sued; a state court entered a final judgment in 2018 concluding that Pung owed about $2, 200 and set the property for foreclosure. More than a year later, the county sold the property at a public auction that produced about $76, 000; after changes in local law tied to Tyler v Hennepin County, Pung received the surplus foreclosure proceeds — the excess of the $76, 000 over the amount the county said it was owed.
Pung’s argument: demand for the property’s monetary equivalent
Pung filed suit in federal district court claiming the sale was a government taking because the sale price was far below what he says was the property’s fair market value of $200, 000. He argues the Fifth Amendment’s Just Compensation Clause requires the government to provide the monetary equivalent of the property it took, and he also contends the process levied an excessive fine in violation of the Eighth Amendment. The lower courts rejected that takings argument, and the justices granted review.
County’s defense: a routine, centuries-old process
Isabella County, joined by several states, says the procedures Pung challenges are routine and have been used for centuries and that existing takings jurisprudence does not require application of a full fair market value in this foreclosure context. The county points to recent cases that reason property subject to a foreclosure sale is simply “worth less” because of the “strictures” of that process and argues the constitutional question is whether a sale was conducted properly with adequate notice and a free opportunity for competitive bidding — elements Pung does not challenge, the county says.
The dispute raises a focused constitutional question about how much the government must pay when it collects unpaid taxes by involuntary sale; scotus blog highlighted that outcome could affect longstanding foreclosure procedures across jurisdictions if the Court sides with Pung.
The Court’s next step is the argument scheduled for next week in Pung v Isabella County. Justices will take up whether returning auction proceeds and the statutory framework that governs tax foreclosure sales satisfy the Constitution’s Just Compensation Clause, and the Court will decide the case after oral argument.
