Tax-Sale Foreclosure – Takings Clause & Just Compensation
Current understanding
Following Tyler v. Hennepin County (2023), which held that government retention of surplus equity in tax-sale foreclosures constitutes a Fifth Amendment taking, the open question was how just compensation is measured. In Pung v. Isabella County, the Supreme Court held that just compensation is measured by the actual auction sale price (with surplus proceeds returned to the former owner) rather than the property’s hypothetical fair market value, and further held that the Eighth Amendment Excessive Fines Clause imposes no greater remedy. Practical effect: delinquent taxpayers whose properties are sold at tax auction receive surplus above tax debt but bear the risk of below-market auction outcomes; municipalities face narrower liability than a fair-market-value rule would impose.