The 2023 Supreme Court Ruling That Changed Everything

On May 25, 2023, the United States Supreme Court issued a unanimous decision in Tyler v. Hennepin County that fundamentally changed the landscape of property rights and surplus funds in America. This landmark ruling affirmed what many believed all along: the government cannot keep surplus funds from property sales beyond what is owed in taxes or debt.

For former homeowners who lost property to tax foreclosure, this ruling opened new doors to recover money that was rightfully theirs.

The Supreme Court ruling brought hope to thousands of former homeowners

The Case: Geraldine Tyler's Fight for Justice

The case centered on Geraldine Tyler, a 94-year-old woman from Minneapolis, Minnesota. Here's what happened:

• Tyler owned a condominium that she had lived in for years
• She fell behind on property taxes, accumulating a debt of approximately $15,000
• Hennepin County seized and sold her property for $40,000
• The county kept the entire $40,000 — not just the $15,000 owed in taxes
• Tyler received nothing from the $25,000 surplus

Tyler sued, arguing that the county's retention of the surplus constituted an unconstitutional taking of her property without just compensation.

The Supreme Court's Unanimous Decision

In a rare show of unity, all nine Supreme Court justices agreed: Hennepin County violated the Constitution.

The Court held that:

1. The Takings Clause applies: The Fifth Amendment prohibits the government from taking private property for public use without just compensation
2. Home equity is property: The surplus value in a home — the equity beyond what's owed — is constitutionally protected property
3. Historical precedent supports this: The Court traced property rights back to the Magna Carta, showing that protecting surplus funds has deep roots in Anglo-American law
4. State laws don't override the Constitution: Even if state law allows the government to keep surplus funds, the Constitution prohibits it

What This Means for Homeowners

The Tyler decision has significant implications for anyone who has lost property to foreclosure:

Strengthened Rights to Surplus Funds

The ruling makes clear that former homeowners have a constitutional right to surplus funds from property sales. Government entities cannot simply pocket the excess.

Applies to Tax Sales Nationwide

While the case specifically involved Minnesota, the constitutional principles apply across all 50 states. Any state law that allows governments to keep surplus funds is now constitutionally suspect.

Potential for Retroactive Claims

Some former homeowners may be able to pursue claims for surplus funds that were improperly retained in past years, depending on state statutes of limitations.

Understanding your rights is the first step to claiming what's yours

Increased Scrutiny of Foreclosure Practices

Counties and municipalities are now under greater pressure to properly account for and distribute surplus funds to former property owners.

The Problem of "Home Equity Theft"

Before the Tyler decision, the practice of governments keeping surplus funds was sometimes called "home equity theft." The scope of the problem was staggering:

• A Pacific Legal Foundation study found that between 2014 and 2021, over 8,900 homes were taken through tax foreclosure where the government kept the surplus
• The total value of equity taken exceeded $280 million
• At least 12 states had laws allowing this practice
• The victims were often elderly, disabled, or low-income homeowners

The Tyler ruling effectively declared this practice unconstitutional.

States Affected by the Ruling

Before Tyler, the following states had laws that allowed governments to keep surplus funds from tax sales:

• Alabama
• Arizona
• Colorado
• Illinois
• Maine
• Massachusetts
• Minnesota
• Montana
• Nebraska
• New Jersey
• New York
• Oregon
• South Dakota

These states must now reform their practices to comply with the Supreme Court's ruling.

What Happens Now?

Following the Tyler decision:

States Are Changing Laws

Many states are revising their tax foreclosure statutes to ensure surplus funds are returned to former property owners.

Counties Are Updating Procedures

Local governments are implementing new processes to identify, track, and distribute surplus funds.

Former Owners Are Filing Claims

People who lost property to tax foreclosure are now pursuing claims for surplus funds that were improperly retained.

Litigation Continues

Class action lawsuits and individual claims are being filed against counties that kept surplus funds in violation of property owners' rights.

How to Claim Your Surplus Funds

If you lost property to a tax foreclosure and believe surplus funds were retained by the government:

1. Determine the sale price: Find out how much your property sold for at auction
2. Calculate the surplus: Subtract the taxes owed, fees, and costs from the sale price
3. Contact the county: Reach out to the county treasurer or tax collector about claiming surplus funds
4. Check for time limits: Some states have deadlines for filing claims
5. Consider legal help: For complex cases or if your claim is denied, professional assistance may be valuable

The Bottom Line

The Tyler v. Hennepin County decision represents a major victory for property rights in America. The Supreme Court unanimously affirmed that the government cannot use a tax debt as an excuse to confiscate a homeowner's entire equity.

If you lost property to foreclosure — especially tax foreclosure — and didn't receive surplus funds from the sale, you may have a valid claim. The Constitution is now clearly on your side.

Don't let your money sit unclaimed. Take action to recover what's rightfully yours.