(WASHINGTON, D.C.) - A Michigan tax foreclosure case out of Isabella County is headed to the U.S. Supreme Court -- and the outcome could change how governments across the country handle seized homes. The case involves a home once owned by the estate of Timothy Scott Pung. County officials say the property was taken and sold after about $2,200 in unpaid taxes and fees. The home sold at auction for roughly $76,000, even though it was assessed at nearly $195,000. The Pung family argues the county's action amounted to an unconstitutional penalty by allowing the government to keep the difference between the tax debt and the home's value. Their attorneys say homeowners should be compensated based on a property's fair market value when it's seized and sold.
A federal judge previously ruled the estate was entitled to surplus auction proceeds beyond the tax bill, but the family appealed, arguing that still leaves homeowners without much of their equity. Isabella County officials counter that requiring payment of full market value would make tax foreclosure systems unworkable and lead to costly disputes over property valuations. The Supreme Court agreed in October to hear the case, with arguments expected early next year. The case builds on a 2023 ruling that said governments can't keep more money than what's owed in back taxes. Legal experts say this new decision could further define how much protection homeowners are entitled to -- with potential nationwide impacts on property taxes and local government revenue.