U.S. Supreme Court case aims to stop homes from being taken for small tax debts without compensation

Illinois homeowners have lost the full value of their homes over relatively small tax debts. But a case now before the U.S. Supreme Court could end that practice in Illinois and across the country.

Geraldine Tyler, a grandma from Minnesota, owed $2,300 in property tax. Over time she racked up interest, fees, and other penalties until her total bill reached $15,000.

Eventually Hennepin County, Minnesota, seized her condo, sold it for $40,000 and kept all the money – $25,000 more than what it was owed. Tyler sued the county, and the U.S. Supreme Court heard oral arguments in the case on April 26.

This or similar practices, which amount to theft of home equity by local governments, occurs in 21 U.S. states, including Illinois. In Illinois, county governments sell delinquent taxes, giving the purchaser a tax lien on the property and collecting interest from the homeowner on the tax debt. If the owner does not redeem the property by paying the taxes and interest, the purchaser can petition the court for a deed to the property without compensating the former homeowner at all.

Illinois homeowners in the state’s top 11 most populous counties have lost almost $400 million in tax foreclosures between 2014 and 2021, according to research by the Pacific Legal Foundation. On average, these former homeowners lost 84% of their equity. Among those counties studied across the country, Illinois suffered the highest number of homes taken under this scheme and, combined, lost the most equity in their homes.

Illinois has some of the highest property taxes in the country. Poor and disadvantaged Illinoisans are often the ones struggling with payments, and therefore in danger of losing all the equity they’ve built up in their homes if they miss property tax payments. Local governments taking more than they are owed from some of the most vulnerable in our state without providing compensation is unconscionable. It also violates the U.S. Constitution. But Tyler’s case could end this practice across the country, including in Illinois.

That is why the Illinois Policy Institute joined the Buckeye Institute, the Competitive Enterprise Institute, the Manhattan Institute for Policy Research and the National Federation of Independent Business Small Business Legal Center in filing an amicus brief in support of Tyler’s case against Minnesota.

The Fifth Amendment states private property shall not be taken for public use without just compensation. Minnesota’s, and in turn Illinois’, practice of home equity theft violates this principle. A tax debt worth a fraction of the home value should not cause someone to lose everything without compensation.

If the U.S. Supreme Court agrees, homeowners who cannot pay their property taxes will no longer see government adding to their financial distress by taking what is likely their biggest asset.