The U.S. Supreme Court has made a unanimous decision in a tax foreclosure case, ruling that local governments do not have to pay homeowners the full fair market value of seized property. The case, which originated in Isabella County, Michigan, involved a family who claimed that the county had committed ‘home equity theft’ by selling their home at a public auction for less than its fair market value.

Background of the Case

The Pung family had a $2,241.93 tax debt, and the county foreclosed on their 3,000-square-foot home. The home was then sold at auction for $76,008, which was significantly less than its fair market value of $194,400. The family argued that the Constitution required ‘just compensation’ based on the home’s actual worth, rather than the low auction price.

The Supreme Court, however, ruled that the ‘proper baseline under the Takings Clause is the price obtained in a tax sale, at least when the sale is fairly conducted in light of our country’s history of tax sales.’ The court also noted that creating a fair-market-value baseline would impose ‘unprecedented burdens’ on local governments seeking to collect unpaid taxes.

Implications of the Ruling

The ruling has significant implications for local governments and homeowners. It means that local governments will not have to pay homeowners the full fair market value of seized property in tax foreclosure cases. Instead, they will only have to pay the price obtained at the public auction, which may be significantly less than the property’s fair market value.

The case has been ongoing for over a decade, with the Pung family arguing that the county’s actions constituted ‘home equity theft.’ The family’s attorney, Larry Salzman, expressed disappointment with the ruling but said that they would continue to fight the case in lower courts.

Original reporting: Fox News (HLL/CB) — read the source article.