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Property Tax Strict Foreclosure – A Final Update

Posted on May 31, 2023


Guest blogger Anna Gooch of the Center for Taxpayer Rights follows up on prior posts and discusses the Supreme Court’s decision in Tyler v Henepin County. Anna was an early and prescient commentator on how a state’s use of strict foreclosure raises significant constitutional issues. Les

I have twice written (here and here) on strict foreclosure by state and local governments. Strict foreclosure allows the creditor to obtain both the legal and equitable title to the property upon foreclosure, meaning that the owner-debtor never receives any amount received in excess of the amount of debt owed. In my last post, I wrote about several cases, including Tyler v. Hennepin County. On Thursday, May 25, the Supreme Court rendered its decision in Tyler. In a unanimous opinion, the Court delivered a victory for property owners and for taxpayer rights.


A summary of the facts and lower court proceedings is necessary before delving into the Supreme Court’s opinion. Geraldine Tyler, who is currently 94 years old, purchased a condo unit in 1999 in Hennepin County, Minnesota. She lived there by herself until 2010, when she and her family agreed that it would be best for her to move into a senior living community. She retained ownership of her condo, but neither she nor anyone in her family made any property tax payments once she moved out. By 2015, the amount of unpaid property tax, including penalties and interest, was about $15,000. In that year, pursuant to both Minnesota and Hennepin County law, the county began foreclosure proceedings against Ms. Tyler’s condo to recover the unpaid balance. The county sold the condo for about $40,000. Ms. Tyler never received the difference between the sale proceeds and the unpaid debt, nor did she have an opportunity to request that it be returned to her.


Minnesota, along with several other states, authorizes counties to pursue strict foreclosure to recover unpaid property tax. This means that in the event of default, the county can take both legal and equitable title to the property. There is no opportunity for the property owner to recover the equity that remained after the sale. Strict foreclosure transfers to the creditor any property interest that the owner had in the property before the foreclosure.

Ms. Tyler sued the county, arguing that strict foreclosure violates both the state and federal constitutions. Specifically, she argued that the practice violated the Fifth Amendment’s Takings Clause and the Eighth Amendment’s Excessive Fines Clause. The District Court and the Court of Appeals both agreed with the county. The Eighth Circuit Court of Appeals affirmed the District Court’s holding that Ms. Tyler failed to state a claim upon which relief could be granted. They agreed that Ms. Tyler no longer had a property interest that could be protected by the Takings Clause. Neither court discussed the Eighth Amendment issue. Ms. Tyler, the named plaintiff in this class action, then appealed to the Supreme Court.

The Supreme Court Opinions – Standing

The unanimous opinion, written by Chief Justice Roberts, first addresses the threshold question of standing and whether Ms. Tyler plausibly stated a claim. The Court quite plainly states that Hennepin County’s refusal to refund to Ms. Tyler the equity that remained after the satisfaction of her property debt “is a classic pocketbook injury sufficient to give her standing.” The Court also addresses a new claim from the County that had not been raised previously. The County now argues that there was a mortgage remaining on the condo, so even if it wanted to, the County could not return the excess proceeds to Ms. Tyler because it would be required to apply those proceeds to the mortgage. The Court rejects this argument on two grounds. First, the County never provided any evidence of any encumbrances to any Court. Second, Minnesota law extinguishes any encumbrances after a tax sale.

The Supreme Court Opinion – Takings Clause

Having determined that Ms. Tyler had standing and that she properly stated a claim, the Court discusses whether the harm that Ms. Tyler suffered was a result of Hennepin County’s violation of the Takings Clause.

Just as the court did in a similar case called Hall, which I blogged about in February, the Supreme Court here focuses on the history of the concept of property and of takings. The Fifth Amendment and the Takings Clause do not define “property.” However, centuries of English and American support the position that an equity interest in property cannot be extinguished without compensation. Indeed, many states have taken affirmative steps to overturn historical practices of strict foreclosure. States cannot legislate around this history, and many have not. Over thirty states and the federal government do not permit strict foreclosure. Similarly, the Court’s precedent indicates that even in extreme circumstances, excess proceeds from tax sales must be returned to the owner. The Court has long held that even when a statute governing tax sales is silent as to the requirement of the return of excess proceeds, it is assumed that proceeds should be returned to the owner, absent an opportunity to request that the proceeds be returned.

The Court also discusses the fact that Minnesota law only allows for strict foreclosure when the government is the creditor; no other creditor is permitted to retain equity remaining after a sale. The Court rejects this exceptionalism, stating, “Minnesota may not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when it is the one doing the taking.”

Finally, the Court addresses the County’s allegation that even if a property owner does not lose their ownership in the equity of the property by the initiation of a foreclosure, Ms. Tyler had long abandoned her interest by not paying property tax. Consequently, the County argues, Ms. Tyler had lost her property interest before the County initiated any proceeding against her. The Court readily rejects this proposition, stating that “the County cites no case suggesting that failing to pay property taxes is itself sufficient for abandonment.” Moreover, “Minnesota’s forfeiture scheme is not about abandonment at all. It gives no weight to the taxpayer’s use of the property.”

The Court easily concludes that Ms. Tyler retained an equity interest in her home when Hennepin County began foreclosure proceedings – the County was not permitted to destroy it by legislation, to alter it by excepting itself, or to deem it abandoned.

The Gorsuch/Jackson Concurrence

Just as we saw in Bittner, Justices Gorsuch and Jackson joined together. Their concurrence addressed Ms. Tyler’s 8th Amendment Excessive Fines claim, which had been addressed by neither the lower courts nor the Supreme Court’s majority. The County argued and the District Court agreed that its strict foreclosure practice did not violate the Excessive Fines Clause because the practice was not punitive. They provided three justifications for this position, all of which the concurrence rejects. First, they asserted that the “primary purpose” of the strict foreclosure law was remedial rather than punitive. The concurrence emphatically responds, “This primary-purpose test finds no support in our law.” Second, the County argued that the law is not punitive because a property owner might end up in a positive position if the County is only able to recover less than the amount of tax owed at the foreclosure sale. The Court responds, “Not has this Court ever held that a scheme producing fines that punishes some individ­uals can escape constitutional scrutiny merely because it does not punish others.” Finally, the District Court held that the law was not punitive because it did not turn on the property owner’s culpability, but rather serves as a deterrent to property owners. The Court responds that it has “never endorsed” such an interpretation. Though merely informative, this concurrence serves as a signal to the state courts that they “should not be quick to emulate” the analysis of the District Court in Tyler.


As the Court points out, strict foreclosure is not common. Neither the federal government nor a majority of states allow the practice. However, the fact that 14 states that did authorize strict foreclosure (before this opinion) is not insignificant. The Court’s unanimous decision in Tyler not only effectively ends the practice of strict foreclosure for unpaid property tax, but it also suggests that the Court is dedicating itself to the protection of taxpayer rights, at the federal, state, and local levels.

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