A federal district court accepted a constitutional lawsuit today challenging local property tax assessment and foreclosure practices, clearing the way for a potential federal jury trial. Property owners in the suit argue that local county tax foreclosures violated Fifth Amendment Takings Clause rights and Fourteenth Amendment due process standards by seizing home equity far exceeding the underlying delinquent tax debts.
The district court’s decision to advance the case comes after the Supreme Court ruled in Pung v. Isabella County that the constitutional floor for just compensation in a tax foreclosure sale is the auction price rather than fair market value. Because property owners alleged procedural irregularities and inadequate notice during the original tax sale, the federal judge denied the local government’s motion to dismiss today, allowing disputed factual claims regarding the sale’s fairness to proceed toward a jury.
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