A woman in Minnesota lost her $40,000 condo over a $15,000 tax debt. Now, the U.S. Supreme Court is considering whether the government owes her the surplus. 

The case could have big implications for New Bedford, where dozens of property owners have lost their houses over tax debts that were just a fraction of the property’s value. The New Bedford Light’s Grace Ferguson listened in on the proceedings and breaks down the arguments in this special podcast.

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CHIEF JUSTICE JOHN ROBERTS: We’ll hear argument this morning in case 22-166, Tyler v. Hennepin County.

REPORTER GRACE FERGUSON: There’s a case before the Supreme Court that could have big implications for homeowners across the country — including right here in New Bedford. You’re listening to a special podcast from the New Bedford Light. I’m Grace Ferguson. The plaintiff in this case is Geraldine Tyler, a 94-year-old woman who stopped paying the taxes on her condo in Minneapolis. The county foreclosed on the property after a few years to collect on the tax debt. Christina Martin is one of the lawyers helping Tyler sue Hennepin County. Here she is arguing before the court on Wednesday.

CHRISTINA MARTIN: Here, Geraldine Tyler owed $15,000, which included nearly $13,000 in penalties, interest, and related costs. To satisfy that debt, Hennepin County took Ms. Tyler’s former home, which was worth much more than that, and later sold it for $40,000. The county kept all $40,000 for public uses.

GRACE FERGUSON: This is how tax foreclosure is done in a handful of states, including Massachusetts. The government can foreclose on your home to collect on late taxes, and they can keep the entire value of the home, no matter how little you owed. Critics of this practice call it “home equity theft.” Earlier this year, a New Bedford Light investigation found that dozens of New Bedford property owners lost their houses — and all the remaining equity in them — over tax debts that were only a fraction of the property’s value. The lawyers representing Tyler have also represented homeowners in other states — there have been a few in Massachusetts including a woman from New Bedford. But none of those cases have gotten this far. Now, the Supreme Court is set to decide whether this tax collection practice is constitutional. Tyler’s lawyers say Hennepin County violated the Fifth Amendment — it says the government can’t take private property without just compensation. So for example, they can take your house through eminent domain if they want to build a highway there, but they have to pay you back for whatever the house is worth. Martin, Tyler’s lawyer, argued that home equity is private property. So, the surplus equity in a tax foreclosure should go back to the property owner.

CHRISTINA MARTIN: By taking absolute title to Ms. Tyler’s property, including the value that exceeded the debt, the county has taken private property without just compensation.

GRACE FERGUSON: The county doesn’t see it as a taking under the Fifth Amendment. Its lawyers argue that local governments can set reasonable conditions on land ownership — like keeping up with your taxes. So if you don’t meet those conditions, the government can force you to forfeit your property. Here’s the county’s lawyer, Neal Katyal.

NEAL KATYAL: Petitioner failed to act after repeated notice for five years. Because owners can act to avert this result, this Court has not called such actions takings.

GRACE FERGUSON: Okay, so Tyler says it’s a taking, and the county says it’s not — they call it a forfeiture. What’s the difference? Well, a taking is completely out of the property owner’s control. The government comes along and says “we want your property — hand it over.” The framers of the constitution wanted to make sure that the government compensates you fairly when they force you to give up your property and there’s nothing you can do to stop it. But let’s look at this situation as a forfeiture. The county argues that technically, Tyler wasn’t forced to give up her property. She could have stopped the process by paying her taxes. But she didn’t, and as a consequence, the county took it. So the county argues that it’s a forfeiture, which isn’t the same thing as a taking under the fifth amendment — and that means Tyler isn’t entitled to just compensation. Katyal, the county’s lawyer, says this is a legal tradition that goes all the way back to medieval England. He cited the Statute of Gloucester in 1278. But Justice Neil Gorsuch wasn’t having that.

JUSTICE NEIL GORSUCH: The statute of Gloucester was about lands owned by the feudal lord and what happens when a vassal fails to provide enough wheat to his lord and can his lands, which really belong to the lord, escheat to the lord. And I just don’t understand what on earth any of that history has to do with this case.

GRACE FERGUSON: Katyal also spent a lot of his time arguing that Tyler doesn’t even have legal standing to sue because she had other debts on the property. But the justices weren’t really interested in entertaining that argument. They asked, where’s the limit? What if the county wanted to foreclose on a million dollar property over a five dollar debt? Katyal said that’s still not a taking. Here’s Chief Justice John Roberts.

JUSTICE ROBERTS: If all that’s true on the extent to which you’re – you’re willing to push the state’s authority, what’s the point of the Takings Clause? I mean, that was something that was pretty important to the framers.

GRACE FERGUSON: Justice Elena Kagan asked about other scenarios that could also be considered takings — like, what if you owe $10,000 in income tax, and the government seizes your $100,000 bank account, and doesn’t give you back the 90,000? Katyal said that would be a taking.

JUSTICE ELENA KAGAN: What’s the difference? Why should land be treated so much more favorably to the — that the state can just keep the whole when the state could never do that with cash?

NEAL KATYAL: It’s — it’s not as much about land being different as there is a different historical tradition.

GRACE FERGUSON: Here’s Justice Amy Coney Barrett.

JUSTICE AMY CONEY BARRETT: What about the hypothetical of you owe, like, $20 of parking tickets? Can the state just take your whole car?

NEAL KATYAL: Again, I don’t think that there’s a — that would be a reasonable condition on ownership because there is no tradition that goes back that could be looked to.

JUSTICE BARRETT: Well, there weren’t cars then. Your buggy?

GRACE FERGUSON: Katyal kept coming back to this idea that, historically, governments have a tradition of putting special conditions on land ownership: get behind on taxes, lose your land. Chief Justice Roberts pushed back on that.

JUSTICE ROBERTS: Counsel, I think you’re right that there’s a difference between the value that our history places upon money and property, but I think it’s the exact opposite of what you’re saying. I think our cases bear this out, where they talk about property, you know, land, being essential to the preservation of liberty and it’s a bulwark against the dominance of the state. Money, on the other hand, you know, inflation, it’s worthless, but land is still there.

GRACE FERGUSON: Tyler’s lawsuit also had a claim under the Eighth Amendment — you probably already know this amendment for its ban on “cruel and unusual punishment.” But it also says the government can’t impose excessive fines. Tyler’s lawyers say that the county is basically charging an excessive fine on late taxes by keeping all her home equity. The county argues that it’s not an excessive fine because it’s not punitive, meaning it’s not for the sake of punishment. But the court didn’t spend a lot of time on that question, and if they rule in Tyler’s favor on the Takings Clause, they won’t have to rule on the Eighth Amendment. The court will issue its opinion sometime in May or June. A New Bedford spokesperson said that if the ruling leads Massachusetts to reform its tax collection processes, the city will abide by the new framework. Tallage, a private company that buys tax debts from cities and towns, didn’t respond to a request for comment on the case. They were the focus of The Light’s investigation into tax foreclosures earlier this year. For the New Bedford Light, I’m Grace Ferguson.


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