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In 2011, Robert Regan of Bourne, Massachusetts, stopped working as a forklift operator after being diagnosed with COPD. In 2015, he failed to pay about $900 in property taxes. The next year, the town took the tax title of his home. Bourne would eventually be able to sell it if Regan failed to pay back taxes and other fees—and under Massachusetts law, Regan and his relatives would get nothing from the sale. Bourne stood to make hundreds of thousands of dollars by dispossessing a dying man dependent on disability checks and supplemental oxygen.
Local governments across the country have the right to take people’s homes when they don’t pay their taxes. In most states, extra money from tax sales go to the former owners. If a family owes $10,000 and the government sells their old home for $150,000, they can get $140,000. But in about a dozen states, the government keeps all $150,000.
On Wednesday, the Supreme Court heard oral arguments in a case that could deem that unconstitutional. The question in Tyler v. Hennepin County is a simple one: Should governments be able to keep excess funds after taking and selling the homes of residents who fail to pay their property taxes? The case has brought together disparate groups from across the political spectrum, and justices on the right and left of the Court were unusually in sync during Wednesday’s arguments.
The Court appears likely to rule that those laws violate the Fifth Amendment’s prohibition against taking private property for public use “without just compensation.” That would prevent states from keeping potentially hundreds of millions of equity in the coming years. Public-interest law groups say the benefits would disproportionately go to low-income Americans who are often elderly or in poor health.
The named petitioner in the case is Geraldine Tyler, a now 94-year-old Minnesota woman whose home was sold in 2016 for $25,000 more than she owed in taxes. Her case was argued by Christina Martin of the Pacific Legal Foundation, which was founded in 1973 by staffers of then-California Gov. Ronald Reagan. PLF has received support from allies on the right, but progressive organizations have gotten behind the case, as well. One of the many amicus briefs supporting Tyler was filed jointly by an unusual coalition that included the libertarian Cato Institute, the National Association of Home Builders, and the ACLU.
The justices’ questions to Martin largely focused on the details of what a decision to prevent states from keeping excess funds would look like. In principle, they appeared to agree that states should not be able to keep the extra money. It is already illegal across the country for lenders to keep surplus funds from mortgage foreclosures.
Hennepin County and its supporters—often other governments that can keep excess funds—argue that people have ample opportunity to redeem the value of their homes. They could sell before seizure or pay their taxes during what can be a years-long period before a government puts a home up for sale. Hennepin County Assistant County Administrator Dan Rogan said in a statement, “When owners ignore all of these options, the legislature has chosen to protect the public from further harm by transferring title to the government—without sending a check to the former owner.”
Neal Katyal, a former acting solicitor general in Barack Obama’s Department of Justice and a self-described “extremist centrist” whose choice of clients has routinely frustrated progressives in recent years, argued Hennepin County’s side before the Court. He began by arguing that Tyler lacks standing because her mortgage debt exceeded the sale price of the home, according to public records the county has cited. The justices did not appear persuaded by that argument.
Katyal also said there was a long record of people losing all their property that dates back to the Statute of Gloucester of 1278 in medieval England, which allowed lords to recover their land from tenants. Justice Neil Gorsuch was unimpressed by that argument, saying the statute was about “lands owned by the feudal lord and what happens when a vassal fails to provide enough wheat.” He added, “I just don’t understand what on earth any of that history has to do with this case.”
Justice Elena Kagan pressed Katyal to say whether there was any limit to the power to hold onto excess funds; could a government owed $5,000 of property taxes, she asked, keep all the proceeds from selling a $5 million home? Katyal didn’t answer directly but eventually said that doing so would not violate the Fifth Amendment’s takings clause. He claimed that it was largely a hypothetical. “In the real world, people don’t walk away, Justice Kagan, from meaningful equity in their homes,” Katyal insisted.
That is not the experience of lawyers who handle tax foreclosure cases. Tanya Dwyer, an attorney in New York with Legal Services of the Hudson Valley, told me she has a client in New York who owes $100,000 on a home he inherited that is worth $600,000. The county will keep the full amount if the home is sold. “These people are in a bad situation,” Dwyer stresses. “They’re not willfully not paying their taxes. They’re just broke.”
Homeowners may miss notices provided to warn them, or they may lack the ability to understand what is happening. AARP stressed in a brief that laws that allow states to keep excess funds have a “devastating and disproportionate impact on the financial security of older adults.” Public Citizen echoed that, arguing “[v]ulnerable populations such as the elderly and disabled, as well as low-income and minority populations, are disproportionately harmed by tax sales.”
The most personal amicus brief in Tyler was filed on behalf of Robert Regan’s cousin Francis Coffey, a Boston-born New Hampshirite who became a lawyer in his 50s after previous careers as an insurance adjuster, a cop, and a car salesman. In addition to the value of his own time, Coffey told me he’s spent close to $100,000 on legal fees to try to get Regan’s house back during years of court battles.
The two-bedroom home was assessed at $300,000 in 2021, but Coffey believes he could get at least $500,000 for it. The home has been in his family since it was built in 1985. His aunt bought it after retiring from a 42-year career as a Boston telephone operator.
After initially taking the property without Regan’s knowledge, the town of Bourne says it notified him in 2017 via certified mail that it was moving to foreclose. Regan, who was in poor health and largely housebound, never responded. He later told Coffey that he’d never received anything. In June 2018, the Massachusetts land court ruled in the town’s favor. Less than six months later, Regan died from complications from COPD. (The Bourne town administrator did not respond to a request for comment.)
Coffey, who now represents Regan’s estate, has failed in his efforts to settle with Bourne by paying whatever is owed. In state court, judges have upheld the land court’s ruling to not vacate its foreclosure decision. One of Coffey’s last resorts is a case pending in federal court that challenges the constitutionality of Bourne keeping all the excess funds of a potential sale. The decision in Tyler v. Hennepin could determine whether he and Regan’s other heirs receive nothing or hundreds of thousands of dollars.
He’s come to see the town’s decision to maintain its claim to the house as a money-making scheme. “They have nothing to gain by encouraging me to pay the back taxes,” Coffey says. “They have everything to gain by digging their heels in and saying, ‘No, we own the property, and we’re taking it.’”
