{"id":247,"date":"2026-06-23T21:41:48","date_gmt":"2026-06-23T21:41:48","guid":{"rendered":"https:\/\/americanservicereview.com\/?p=247"},"modified":"2026-06-23T21:41:48","modified_gmt":"2026-06-23T21:41:48","slug":"justices-reject-constitutional-attack-on-foreclosure-rules","status":"publish","type":"post","link":"https:\/\/americanservicereview.com\/?p=247","title":{"rendered":"Justices reject constitutional attack on foreclosure rules"},"content":{"rendered":"
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Thursday\u2019s decision in Pung v Isabella County<\/em> squarely rejects an argument that the longstanding use of tax foreclosure sales as a method to collect unpaid real-estate taxes violates the takings clause of the Fifth Amendment or the excessive fines clause of the Eighth Amendment.<\/p>\n

Read more Justices send compensation dispute over seized home back to lower court<\/a><\/p>\n

The specific problem that gives rise to the case is the reality that a tax foreclosure sale typically, perhaps invariably, produces a sale price far lower than the price that would come from the ordinary sale process of listing the property with a broker and marketing it over the course of weeks (or months). In this case, for example, Michael Pung\u2019s home was auctioned to recover about $2,200 in unpaid real-estate taxes. The home, with an assessed value of about $194,000, sold at the auction for about $76,000. Under the existing regime, Pung received the surplus \u2013 the difference between the sale price and the amount of taxes. Pung\u2019s claim is that the state also owes him the difference between $194,00 and $74,000 as compensation, even though the state sold the property to a third party at the sale and has nowhere other than general tax revenues from which to recover that sum.<\/p>\n

Justice Samuel Alito for the court, joined by all of the justices except Clarence Thomas. Alito starts by considering the takings problem, which he describes as \u201cwhether \u2018just compensation\u2019 [required by the takings clause] following a tax sale is measured by the price that the property fetched at auction or its hypothetical fair market value.\u201d For the court, \u201cthe auction price is the proper baseline, at least when the procedure is fair in light of our country\u2019s history of tax sales.\u201d<\/p>\n

Alito then briskly recounts the lengthy history, with examples dating to \u201cthe time of Magna Carta,\u201d \u201cthe early days of the Republic,\u201d and \u201clater in the 19th century,\u201d demonstrating that \u201cfor hundreds of years, English and American Law have allowed the seizure and sale of property as a tax-collection method, provided that the government return any surplus proceeds to the debtor\u201d\u2014\u201cnothing less, and nothing more.\u201d Applied to Pung\u2019s challenge then, \u201c[t]he baseline for measuring just compensation in the tax-sale context is \u2026 the sale price, not the property\u2019s hypothetical fair market value.\u201d<\/p>\n

Reprising points that he emphasized at the argument, Alito emphasizes the practical realities that protect the taxpayer from loss in this context:<\/p>\n

Read more Court rules for Exxon Mobil in Cuban confiscation case<\/a><\/p>\n

[I]f the owner believes that the fair market value of the property exceeds the taxes that are due, the owner may be able to avoid foreclosure by refinancing the property or using the property as collateral for a new loan \u2026 Or the owner may be able to sell the property \u2026 himself before foreclosure, pay off the tax debt, and keep what is left \u2026 Here, the Pungs had years to take these steps and avoid foreclosure. \u2026 They failed to do so.<\/p><\/blockquote>\n

Alito also describes the \u201cunprecedented burdens\u201d that Pung\u2019s arguments \u201cwould impose \u2026 on jurisdictions that wish to collect unpaid taxes.\u201d One possibility is that in an effort \u201cto obtain something like fair market value for homes on which they have foreclosed, jurisdictions would have to \u2026 either shoulder the burden of selling the property themselves or employ a real estate agent. In the meantime, local governments would have to do without the unpaid taxes and bear the costs and risks that go with the ownership of unoccupied homes.\u201d Alternatively, jurisdictions that \u201cproceeded with traditional tax-sale procedures\u201d often would face \u201ca net loss\u201d under Pung\u2019s theory, as \u201c[t]he government would be on the hook for any difference between the foreclosed property\u2019s fair market value and the tax-sale price,\u201d typically being (as here) multiples of the proceeds received at the tax sale.<\/p>\n

In the end, Alito explains, the court\u2019s \u201ctask \u2026 is not to decide whether tax sales as historically conducted represent good public policy. Our authority is limited to deciding whether the Takings Clause requires the transformation Pung advocates, and the answer to that question is clear.\u201d<\/p>\n

Alito also devotes a few paragraphs to rejecting Pung\u2019s claim that the local government\u2019s \u201cfailure to compensate him for the fair market value of his property constituted an excessive fine.\u201d On that point, he notes that \u201c[f]orfeiture of property can be a \u2018fin[e]\u2019 for purposes of the Eighth Amendment if it serves \u2018in part to punish.\u2019\u201d He explains that the court always \u201chas consulted historical practice\u201d in examining that question and then concludes that the historical practice that defeats the just compensation claim suffices for this point as well: \u201cSo, like his Fifth Amendment claim, Pung\u2019s Eighth Amendment claim lacks historical or precedential support.\u201d<\/p>\n

The case is unlikely to make any great jurisprudential splash, as it validates what has been a common practice of all levels of government in this country for almost three centuries. Perhaps more notable is the concurrence of Justice Clarence Thomas. He makes two points, the first of which is the conclusion that the Michigan courts erred under Michigan law in concluding that Pung in fact owes any taxes \u2013 a question neither presented to nor decided in the lower court. Second, he concludes that the takings clause obligated the government first to sell Pung\u2019s personal property before proceeding to sell the land that was the subject of the unpaid taxes. Neither of those points resonated with any other member of the court.<\/p>\n

Read more Supreme Court limits ability of foreigners to bring lawsuits for violations of international law<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Thursday\u2019s decision in Pung v Isabella County squarely rejects an argument that the longstanding use of tax foreclosure sales as a method to collect unpaid real-estate taxes violates the takings clause of the Fifth Amendment or the excessive fines clause of the Eighth Amendment. Read more Justices send compensation dispute over seized home back to […]<\/p>\n","protected":false},"author":1,"featured_media":47,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion-analysis"],"yoast_head":"\nJustices reject constitutional attack on foreclosure rules - American Service Review<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/americanservicereview.com\/?p=247\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Justices reject constitutional attack on foreclosure rules - American Service Review\" \/>\n<meta property=\"og:description\" content=\"Thursday\u2019s decision in Pung v Isabella County squarely rejects an argument that the longstanding use of tax foreclosure sales as a method to collect unpaid real-estate taxes violates the takings clause of the Fifth Amendment or the excessive fines clause of the Eighth Amendment. 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