A recent U.S. Supreme Court ruling on a Michigan property seizure case has significant implications for property owners. The court unanimously decided that property owners whose homes are sold in tax foreclosures are generally entitled to the surplus proceeds from a fairly conducted auction, not the property’s fair market value.

Background of the Case

The case began with a Michigan family’s fight over a property seizure by Isabella County. The home, valued at nearly $200,000, was sold at auction for about $76,000 after the county foreclosed over disputed property taxes. The county initially kept all of the sale proceeds, but a federal court later ruled it only had to return the surplus proceeds from the auction—not compensate the family for the home’s full value.

Represented by Pacific Legal Foundation and Michigan attorney Philip Ellison, the Pung family argued they should receive compensation based on the home’s fair market value. Justice Samuel Alito, writing for the court, rejected that argument, finding that the proper measure of compensation is the auction sale price.

Implications of the Ruling

According to Deborah J. La Fetra, Pacific Legal Foundation senior attorney and co-counsel on the case, the court’s emphasis that foreclosure and auction must be fairly conducted allows the Pung family to continue arguing Isabella County violated the Constitution. La Fetra said the court’s decision is disappointing but still important for constitutional rights, as it leaves a path for property owners to challenge the fairness of procedures that resulted in the foreclosure and auction.

Justice Clarence Thomas wrote in a concurring opinion that “what Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional.” Justice Neil Gorsuch joined that opinion, giving the Pung family hope as the case heads back to the 6th U.S. Circuit Court of Appeals.

Original reporting: KTBS 3 (Shreveport) — read the source article.