Tax foreclosures are indeed legal. However, on May 25, 2023, the Supreme Court held in Tyler v. Hennepin, 598 U.S. 631 (2023), that when a local government takes a home at a property tax foreclosure and keeps the homeowner’s equity after the tax debt is paid, it violates the Takings Clause of the Fifth Amendment of the United States Constitution.
The issue stems from the selling of houses for owed taxes when the equity in the houses exceeded the money owed. In essence, depriving the homeowners of their equity in the houses.
The process is as follows: the county treasurer issues a tax deed transferring the entire property from the taxpayer to the county or other lienholder; the forecloser can either keep the property or sell it; and that surplus value—the difference between the taxes owed and the value of the property—is never returned to the former owner.
The victims of this policy are spread across Illinois’s 102 counties, though they are most often poor, elderly, and vulnerable. Stealing the surplus value from these individuals is a practice that should raise concerns.
In conclusion, the class action lawsuit against Illinois counties for their unconstitutional seizure of homeowners’ equity in property tax foreclosures marks a significant step towards justice for the affected individuals and businesses. The Supreme Court’s ruling in Tyler v. Hennepin County underscores the violation of the Fifth Amendment’s Takings Clause, highlighting the importance of protecting property rights for all citizens. By seeking redress on behalf of a broad class of victims, this lawsuit aims to rectify the harm caused by the unlawful deprivation of property value. The class action is Top Metal Buyers Inc. et al v. Lopinot et al., 24-cv-01073.
For more information, please contact the qualified attorneys at Rock, Fusco & Connelly, LLC.