U.S. Supreme Court to weigh legality of Hennepin County keeping revenue from seized properties

The U.S. Supreme Court has agreed to take up the case of a Minneapolis woman in her 90s whose condo was seized by Hennepin County because she didn't pay her property taxes.

The 2015 seizure of Geraldine Tyler's condo isn't in question. Nor is the fact that she owed the county some $15,000 in back taxes, interest and fees.

What's in dispute is what happened to the extra money — $25,000 — after the county sold the condo for $40,000.

The government kept it. She says it belongs to her.

The case, which has been winding its way through the courts since 2019, could have ramifications for how Minnesota and a number of other states handle property seizures for unpaid taxes.

Under Minnesota law, any extra money from the sale of seized property can be kept by the government — divvied up among various government entities, including the local county, city and school district.

Tyler and her attorneys have argued that the government keeping all the revenue is tantamount to the theft of her home equity and violates constitutional protections against uncompensated takings and excessive fines.

Hennepin County has argued — and several courts have agreed — that it doesn't violate the Constitution because states have the ability to define property rights and Minnesota law essentially says if you don't pay your taxes, you don't have any equity.

Moreover, the county argues, what it's doing is reasonable.

"When a property owner fails to pay taxes and does not avail herself of the numerous ways to remedy the deficiency — including selling the property, using the sales proceeds to pay the tax and keeping any surplus — the state's retention of the surplus is not an unconstitutional taking nor is it an excessive fine," said Dan Rogan, assistant county administrator for resident services, in an email Monday.

Tyler bought her condo in 1999. In 2010, she moved into an apartment and stopped paying taxes on her condo, prompting the county to try to collect the taxes and ultimately seize it, according to the court record.

According to her attorneys, Tyler, a widow living alone, moved hastily because of fear of crime in her neighborhood and could no longer afford the taxes on the one-bedroom condo in addition to the rent. She now lives in an assisted living facility.

Tyler's case became a class action and was taken up by the Pacific Legal Foundation, a conservative group that long has held libertarian views on property rights.

According to a study by the group, Minnesota is among 12 states that allow what Pacific has dubbed home equity theft. Twenty-nine states have banned the practice, and the remaining states, including Wisconsin, allow it only in special circumstances, according to the study.

In all but those 12 states, Tyler would have been eligible to receive whatever money was left over from the property sale after her tax debt was paid, said Christina Martin, senior attorney for Pacific.

"The analogy I like to use is: You owe me $10 and I take the $100 bill out of your wallet," she said Monday. "I think everybody could understand that's wrong."

Pacific argues that Minnesota's process violates the Fifth Amendment, which states private property cannot "be taken for public use, without just compensation," and the Eighth Amendment's prohibition of excessive fines.

Oral arguments have not been scheduled, but Martin said she expects the justices to hear the case in April.