Supreme Court to Deliberate Landmark Property Tax Case
The U.S. Supreme Court is poised to address a pivotal case that could significantly impact Michigan homeowners affected by tax foreclosures. The upcoming hearing could potentially lead to financial restitution for those who lost their homes.
Oral arguments are scheduled for Wednesday in the case of Pung v. Isabella County. The core issue is whether the county’s actions infringed upon the Fifth and Eighth Amendment rights of the plaintiffs.
This legal battle traces back ten years, revolving around a contentious special tax exemption. Despite a favorable ruling for the Pung family by a tax tribunal, the county assessor denied the exemption once more. Consequently, Isabella County sold the Pung family’s home, valued at nearly $200,000, to cover a tax bill of $2,241.93. The property fetched only $76,000 at auction.
Lower court decisions have already mandated that the family receive $73,000 from the sale proceeds, which the county initially retained. However, attorney Philip Ellison contends that his clients are entitled to the entire property’s value.
“This is what we call the stolen equity,” Ellison stated, referring to the $118,000 discrepancy between the auction price and the home’s fair market value that went unaccounted.
The county’s legal representative argues that the family had sufficient opportunities to prevent the foreclosure. “Members of a community share the expense of schools, police and fire protection, roads and other government functions through property taxes. If a person doesn’t pay their taxes, they are shifting the burden for those services onto their neighbors,” said Matthew T. Nelson, the attorney for Isabella County.
The county contends that adopting a fair market value approach would compel local governments to incur losses beyond auction revenue.
Ellison argues that outdated tax sale regulations are the root cause of properties being sold for less than their market value. “These governments haven’t kept up with the times,” Ellison observed. “Modern markets today don’t respond well to imposing all of these 1880 standards into the modern purchase of property.”
Should the Supreme Court side with the Pung family, Ellison plans to pursue class action lawsuits on behalf of other Michigan residents who lost homes due to tax foreclosures. He anticipates that these legal actions could obligate county governments to reimburse hundreds of millions of dollars to former property owners.
The Pung family intends to be present at the oral arguments this Wednesday at the U.S. Supreme Court in Washington D.C.
A ruling from the high court is not expected until the conclusion of its current session this summer.
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