Property Tax Seizures vs Homeowners: A Supreme Court Dilemma

The Supreme Court sat on a case that asks whether a county can force a homeowner to sell their house at a low auction price instead of letting them find a buyer on the open market. The core question is whether the government must give the homeowner the full value of their property or only enough to cover unpaid taxes. In 2023, a ruling said that if the state takes a house for back taxes, any money left over after paying those taxes must go to the owner. This week, advocates for property rights pushed the idea that owners should receive the fair market value of their home when it is sold. The dispute began with an estate in Isabella County, Michigan that had unpaid taxes amounting to roughly $2, 000.A court approved a foreclosure sale for $76, 000, and the proceeds went to the family after deducting the tax debt. The homeowners argued that if they had sold the house themselves, it would have fetched about $194, 000—what it actually sold for two years later. During the hearing, justices debated whether a small tax bill could justify selling a home far below its worth. Some judges questioned if the county should first seize smaller items, like a Peloton bike, before targeting the house. Others warned that forcing owners to accept auction prices could undermine the principle that taxpayers should not be penalized for choosing not to sell. The argument from the county’s side warned that insisting on fair market value could cripple tax sales and burden paying taxpayers. A decision is expected by the summer.