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If a homeowner stops paying their property taxes and the county forecloses on the home, what happens to the excess funds from the sale? Common sense might lead you to say that of course any excess funds would go to the homeowner, but that isn’t always the case. The Supreme Court of the United States (SCOTUS) recently heard oral arguments in a case where the county kept the proceeds from the sale for itself.
Geraldine moved into a condo in a senior community center in Minnesota and lived there for about ten years. Geraldine, who is currently 93 years old, had an issue with a neighbor and thereafter moved into an apartment rental. She stopped paying the property taxes that were due on her condo in the senior community. Geraldine accrued about $15,000 in unpaid property taxes, including late fees and penalties, before the county foreclosed on the property. The property sold for $40,000 and the county kept the surplus. Geraldine filed suit and it made its way up to the SCOTUS.
Geraldine argues that the county violated the Fifth Amendment by taking private property without just compensation. Geraldine noted that at least 14 states (including Arizona, Colorado, Illinois, Maine, Minnesota, Montana, Nebraska, New Jersey, and Oregon) allow the government or others, such as private tax lien buyers, to keep the entire equity above the debt amount. In support of Geraldine, numerous amicus curiae briefs were filed by various parties – tax associations, justice institutes, realty groups, the AARP, and even two Congresspersons. The SCOTUS is expected to issue its opinion next month.
We are always reviewing recent cases to help you understand how different jurisdictions are handling the legal issues surrounding Medicaid, VA pension benefits, and special needs planning. During a free webinar next month, our team will be reviewing the provisions of the Secure and Secure 2.0 Acts that impact retirement account planning for clients with special needs and naming charitable beneficiaries in a trust. Secure your seat now!
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