Supreme Court: Government Cannot Retain Excess Proceeds From Home's Tax Forfeiture Sale

The U.S. Supreme Court unanimously held that a Minnesota law permitting the state to retain surplus proceeds from sales of real estate in tax forfeiture sales violated the Fifth Amendment Takings Clause. Under Minnesota law, counties can obtain judgment against taxpayers who fail to pay their real estate taxes. Via the judgement, title to the property would be transferred to the state and the delinquent taxpayer granted three years to pay the taxes, fees and penalties. If not paid within three years, the state obtained title and was permitted to either keep the property for public use or sell it to a private party. If the property was sold, the law allowed the state to keep the proceeds (including proceeds in excess of the tax debt owed). The Supreme Court held that retention of the proceeds in excess of the tax debt constituted a taking of property without just compensation. For more information on real property taxation, visit Tax Facts Online. : Q .