Digital Library: Supreme Court Limits What Former Owner Gets After Property Tax Taking

By: John Rao

July 24, 2026 — Article

On June 23, 2026, the Supreme Court decided another property tax foreclosure issue in Pung v. Isabella County, 2026 WL 1791309 (U.S. June 23, 2026), just over three years since its groundbreaking decision in Tyler v. Hennepin County, 598 U.S. 631 (2023). Pung addresses the measure of just compensation under the Takings Clause and limits it to the surplus at tax sale if the tax sale was “properly conducted.”

In Tyler, the Court held 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.  Pung had the potential to expand the Takings Clause remedy for homeowners who face a total home loss at tax foreclosure, by deciding whether they are entitled to more than the sale proceeds from a public auction as “just compensation.”  Instead, the Court concluded that the “proper baseline” for compensation under the Takings Clause is the price obtained at a tax sale of the property, “at least when the sale is fairly conducted in light of our country’s history of tax sales.” 

This article discusses the implications of the Pung decision, exploring when a tax sale may not be “fairly conducted,” which should help advocates determine the types of challenges to their state tax foreclosure procedures that remain after both Tyler and Pung. The article also identifies states where tax sales may still result in an unconstitutional taking and provides arguments to assist advocates in defending legislative gains won after Tyler, and in seeking new law reforms.