In Tyler v. Hennepin County, the Supreme Court ruled unanimously on May 25, 2023, that a government violates the Fifth Amendment’s Takings Clause when it sells a home to collect unpaid taxes and keeps the surplus. Geraldine Tyler owed roughly $15,000 in delinquent property taxes, interest, and penalties on a Minneapolis condominium. Hennepin County seized the unit, sold it for $40,000, and pocketed the entire $25,000 difference. The Court held that the extra $25,000 was Tyler’s property, and the county had no right to keep it.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota, et al.
Tyler had bought the one-bedroom condo in 1999, later moved to a senior living facility, and let property taxes on the vacant unit lapse. The original tax bill of about $2,000 grew to roughly $15,000 once interest and penalties accumulated. When she sued after the county kept her equity, both the federal district court and the Eighth Circuit dismissed her claims. The Supreme Court reversed.2Cornell Law Institute. Tyler v. Hennepin County
What the Court Actually Held
Chief Justice Roberts, writing for a 9–0 Court, called the county’s retention of Tyler’s surplus “a classic taking in which the government directly appropriates private property for its own use.” The Fifth Amendment forbids that without just compensation.3Constitution Annotated. Amdt5.10.1 Overview of Takings Clause
Minnesota’s defense was that state law had simply redefined property rights so that any equity in a home disappeared once taxes went unpaid. Roberts rejected the argument by pointing to Minnesota’s own laws. When a bank foreclosed on a mortgage in the state, the homeowner was entitled to any surplus after the debt was paid. Minnesota recognized that right in every context except when the government itself was doing the taking. A state cannot switch a property interest off just because acknowledging it would cost the treasury money.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota, et al.
The rule the case establishes is narrow and clear. A government can sell a tax-delinquent home to collect what it is owed. It cannot keep whatever is left after the debt, interest, penalties, and costs of the sale are covered. That remainder belongs to the former owner.
The Gorsuch Concurrence and Excessive Fines
Justice Gorsuch, joined by Justice Jackson, wrote separately to criticize how the lower courts had handled Tyler’s second constitutional argument under the Eighth Amendment’s Excessive Fines Clause. The majority did not need to reach that claim, but Gorsuch flagged three errors in the district court’s analysis. The lower court had asked whether Minnesota’s forfeiture scheme was primarily punitive, when existing precedent applies the Excessive Fines Clause to any scheme that is punitive even in part. It had reasoned that the scheme could not be punitive because it sometimes benefits owners whose properties are worth less than their debt, which Gorsuch called “factually true but legally irrelevant.” And it had discounted the scheme’s deterrent purpose as insufficient to make it punitive.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota, et al.
The concurrence signals that future challenges may succeed on Excessive Fines grounds if a state designs a scheme that technically returns some surplus but still imposes grossly disproportionate penalties on delinquent taxpayers.
Which States the Ruling Affected
When Tyler was decided, roughly 22 states and the District of Columbia had laws that allowed some form of home equity retention in tax foreclosures. Some used strict forfeiture, where the government took title and kept everything. Others used tax lien sales where private investors bought the debt and could eventually claim the whole property if the owner failed to redeem. In either model, the former owner had no right to recover surplus. The Court’s decision put every one of these schemes on notice.
Between 2023 and 2025, at least 19 states passed new laws to comply. Approaches vary. Most now require that surplus from a public auction be returned to the former owner. Some use licensed brokers to sell tax-delinquent properties on the open market, aiming closer to fair market value. A few have created procedures for former owners whose properties were taken before Tyler to file claims for past surplus. Not every state has acted, and in states without implementing legislation, former owners may need to sue to enforce the constitutional right directly.
How to Recover Surplus Funds After a Tax Sale
The constitutional right is settled. The process for getting the money is not uniform. In states with administrative procedures in place, a former owner typically files a claim with the county treasurer or tax collector, provides proof of ownership at the time of the sale, and receives whatever surplus remains after allowable deductions. In states that have not created a procedure, or for sales that occurred before reform legislation, a lawsuit may be necessary.
How the Sale Proceeds Are Applied First
When a government sells a tax-delinquent home, the proceeds come off the top in a set order. The costs of the sale are paid first. Then the delinquent taxes, penalties, interest, and any fees tied to the foreclosure. Some jurisdictions also allow other government debts owed by the former owner to be deducted before anything else. Only after those obligations are satisfied does surplus exist. The amount a former owner actually receives can be substantially less than the raw gap between the sale price and the original tax bill.
Other Lienholders May Have Priority
Surplus does not always go straight to the former homeowner. If the property carried an outstanding mortgage, HOA lien, or judgment lien at the time of the tax sale, those creditors may have a claim on the surplus ahead of the owner. Most states follow a “first in time, first in right” rule, paying lienholders in the order their liens were recorded. Whatever remains after valid liens are satisfied belongs to the former owner. A mortgage that was still active when the tax sale happened will typically be paid before the owner sees anything.
Deadlines That Can Erase the Right
Time limits are the trap. State deadlines to claim surplus funds range from as little as one year after the sale to ten years in some places. Missing the deadline can mean forfeiting the money for good, usually to the county’s general fund. If you lost a property through tax foreclosure, find out your state’s specific deadline before doing anything else.
Former owners who bring a federal civil rights suit under 42 U.S.C. § 1983 face a different clock. That statute borrows the state’s personal injury limitations period, commonly two or three years, and it generally runs from the date of the sale or the date the surplus was retained. Owners whose homes were taken years before Tyler face additional obstacles, though some states have created limited windows for retroactive claims.
What Tyler Does Not Cover
The decision applies to government-initiated foreclosures for unpaid taxes. It does not change the rules for private mortgage foreclosures. Most states already required lenders to return surplus proceeds to homeowners in a bank foreclosure long before Tyler, and Roberts used that fact against Minnesota in the opinion. If you are facing a bank foreclosure rather than a tax foreclosure, Tyler is not your case, but state foreclosure law probably already protects your equity.
What Happened After the Ruling
The Supreme Court reversed the Eighth Circuit’s dismissal and sent the case back for further proceedings. Tyler’s individual claim was allowed to move forward, and the ruling opened the door to a broader class action on behalf of Minnesota property owners who had lost equity through the state’s forfeiture system. That litigation produced a reported $109 million settlement for affected homeowners across the state.
Tyler’s $25,000 was small next to the cumulative losses nationwide, but it was enough to force the Court to draw a line: a government can collect what it is owed, and nothing more.