SCOTUS Sides with County on Tax Sale of Foreclosed Home

Real Estate attorney Alexander Lycoyannis was cited in an Accounting Today article on the U.S. Supreme Court's unanimous decision in Pung v. Isabella County, a case examining how much compensation is owed to property owners when local governments seize and sell their homes to satisfy unpaid property tax debts. The court held that when a tax foreclosure sale is fairly conducted, returning the surplus auction proceeds to the former owner satisfies the Fifth Amendment's Takings Clause and Eighth Amendment's Excessive Fines Clause, rather than requiring payment of the property's fair market value. Mr. Lycoyannis, who co-hosted a Holland & Knight Real Estate Law Unlocked podcast episode previewing oral arguments in the case, explained that the ruling preserves longstanding tax foreclosure frameworks and rejected a rule that would have altered local tax enforcement practices.

"As a result of the decision, future litigation will focus not on abstract valuation disputes but on challenges to the mechanics and procedures of tax auctions themselves – including notice, bidding conditions, the validity of the underlying debt and whether the government took more property than necessary to satisfy that debt," he said.

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