Pung v. Isabella County
When a government takes a person's home to collect a tax debt and keeps all the proceeds—including any amount exceeding the debt—does that constitute an unconstitutional 'taking' of private property without just compensation under the Fifth Amendment?
The Decision
Roberts
·
Kagan
·
Gorsuch
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Kavanaugh
·
Barrett
·
Jackson
·Decided June 23, 2026
Majority Opinion— Justice Alito
The Supreme Court addressed whether, after a local government seizes and sells a home to collect unpaid property taxes, the former homeowner is entitled to compensation based on the property's fair market value or only the surplus proceeds from the tax sale (the difference between the sale price and the tax debt). The Pung family owed $2,241.93 in property taxes, and Isabella County, Michigan, foreclosed on and sold their home—assessed at $194,400—for just $76,008 at a public auction. The family argued the Constitution required the government to pay them based on the home's full fair market value, not the lower auction price.
The Court ruled against the family on this point, holding that under the Fifth Amendment's Takings Clause, the proper measure of "just compensation" after a tax sale is the auction sale price, not the property's hypothetical fair market value—at least when the sale is conducted fairly in light of the country's long history of tax sales. The Court traced hundreds of years of English and American legal tradition showing that governments have always been required to return surplus sale proceeds to the former owner, but never fair market value. The Court also noted that requiring fair market value would make tax sales impractical: governments would often lose money on the sales themselves, undermining a longstanding and important debt-collection tool. The Court similarly rejected the family's Eighth Amendment excessive-fines argument, finding no historical basis for requiring more than surplus proceeds.
However, the Court did not close the door entirely. It acknowledged that the family raised arguments that the specific procedures the County used were unfair, but said those arguments were not properly part of the question the Court agreed to decide. The Court vacated the lower court's judgment and sent the case back so the Sixth Circuit could consider whether those procedural fairness arguments were preserved and, if so, whether they have merit.
Concurring Opinions
Justice Sotomayor
Justice Sotomayor, joined by Justices Gorsuch and Jackson, wrote separately to emphasize an important limit on the majority's ruling. She agreed that the government does not always have to pay fair market value after a tax sale, but stressed that the Court's opinion should not be read as defining exactly what makes a tax-sale auction "fair." She noted that the Court correctly left those questions for the lower court to address on remand, and joined the majority opinion with that understanding.
Justice Thomas
Justice Thomas, joined in large part by Justice Gorsuch, wrote a lengthy concurrence telling the full story of what happened to the Pung family. He detailed how a local tax assessor wrongly denied the family a tax exemption, imposed taxes the family did not owe, and then foreclosed on their home over a $2,242 debt that was never legitimately owed—all while the family had won multiple court rulings in their favor. The home, assessed at $194,400, sold at auction for only $76,008, and the new buyer resold it for $195,000 just 18 months later.
While agreeing that history can justify departing from the usual fair-market-value rule in some tax-sale situations, Justice Thomas argued that the County's conduct here likely went far beyond what history would permit. He pointed to longstanding legal traditions requiring the government to first try to collect debts from personal property before seizing a home, to sell only as much property as needed to cover the debt, and to provide rigorous notice. The County, he argued, violated all of these principles. He expressed his preliminary view that the County's actions were likely unconstitutional and emphasized that the Takings Clause exists precisely to protect homeowners' property rights against government overreach, even when the government claims efficiency justifies its actions.
Oral Argument Recording
Via Spotify ↗
Background & Facts
Timothy Scott Pung owned property in Isabella County, Michigan. When he fell behind on his property taxes, the county used Michigan's General Property Tax Act to seize and sell his property. Under Michigan law at the time, the government was entitled to keep the entire sale proceeds—even if the sale netted far more than the amount of taxes owed. The county kept the surplus beyond the tax debt, leaving Pung's estate with nothing. His personal representative, Michael Pung, sued Isabella County, arguing that keeping the surplus profit violated the Takings Clause of the Fifth Amendment, which prohibits the government from taking private property without paying 'just compensation.'
The United States Court of Appeals for the Sixth Circuit ruled against Pung, holding that no unconstitutional taking occurred because Michigan's statutory scheme defined the property rights at stake—in other words, Michigan law itself said that taxpayers had no right to the surplus equity once a tax foreclosure was complete. The Sixth Circuit reasoned that the government's retention of surplus was lawful under that framework.
The Supreme Court agreed to hear the case after granting certiorari in October 2025. This case follows closely on the heels of Tyler v. Hennepin County (2023), in which the Supreme Court unanimously held that a similarly situated Minnesota homeowner did have a constitutionally protected property interest in the equity of her home beyond the tax debt. The Court in Tyler left open important follow-on questions about the remedy, and Pung's case presses those questions in the Sixth Circuit context.
Why This Case Matters
This case has major implications for millions of American homeowners, particularly elderly and low-income individuals, who can lose their homes—and all accumulated equity—over relatively modest unpaid tax bills. Dozens of states and localities have operated tax foreclosure systems that allow governments to retain all sale proceeds, and the Court's decision will determine whether those practices violate the Constitution's Takings Clause. A ruling for the petitioner could require governments across the country to compensate former property owners for equity stripped away during foreclosure, potentially affecting billions of dollars in past and future transactions.
The case also forces the Court to clarify the scope and remedies available after its 2023 Tyler v. Hennepin County decision, which established the constitutional right but did not fully resolve what compensation is owed or how lower courts should calculate it. The extraordinary breadth of amicus participation—including the U.S. Solicitor General, numerous states, local government associations, consumer advocacy groups, and property rights organizations—reflects how consequential the ruling will be for government finance, housing policy, and constitutional property rights.
The Arguments
When Isabella County seized and sold Timothy Pung's property for unpaid taxes and kept all sale proceeds beyond the tax debt, it unconstitutionally took his property without just compensation in violation of the Fifth Amendment. The Supreme Court's 2023 decision in Tyler v. Hennepin County confirmed that a homeowner's surplus equity is a constitutionally protected property interest, and Isabella County's retention of that surplus must be compensated. Michigan cannot define away the constitutional protection by structuring its foreclosure statute to extinguish property rights before the taking occurs.
- Tyler v. Hennepin County (2023) squarely established that homeowners retain a protected property interest in equity above the tax debt, and that precedent controls here.
- The government may not use its own statutes to redefine property rights in a way that strips constitutional protections before a taking occurs—what the Court calls the 'anti-circularity' principle.
- Keeping surplus proceeds is not a legitimate method of collecting taxes; it amounts to a windfall for the government at the owner's expense.
- Just compensation requires returning the difference between the sale price and the tax debt owed, along with any applicable interest or damages.
Michigan's tax foreclosure scheme operates within constitutional limits because property owners receive extensive pre-foreclosure notice and opportunity to redeem their property, and the statutory framework governs what property rights exist at the moment of transfer. The county argues that even if Tyler v. Hennepin County applies, important questions remain about the scope of any remedy, the measure of just compensation, and whether federal or state law should govern these property-right definitions. The county contends that local governments rely on the certainty of clean title from tax foreclosures to function, and that disrupting this system retroactively would impose severe fiscal harm on municipalities.
- Michigan's robust redemption period and notice requirements protect property owners long before any sale occurs, distinguishing this scheme from an unconstitutional forfeiture.
- Even after Tyler, the measure of 'just compensation' is genuinely disputed—it is not automatically the full surplus proceeds, and courts must carefully assess fair market value and offsetting government expenditures.
- State law traditionally defines property rights, and federal courts should not lightly override a state's chosen method for resolving tax delinquency.
- A sweeping ruling requiring compensation for past foreclosures would impose massive retroactive liability on counties and municipalities that acted in good faith under settled state law.
Precedent Cases Cited
Tyler v. Hennepin County
598 U.S. 631
The Court's most recent and directly controlling precedent, which unanimously held that a homeowner's equity in her property above the tax debt is a constitutionally protected property interest that the government cannot seize without just compensation.
Knick v. Township of Scott
588 U.S. 180
Established that property owners may bring Takings Clause claims directly in federal court without first exhausting state court remedies, clearing the procedural path for suits like this one.
Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection
560 U.S. 702
Discussed whether a state court's interpretation of property law can itself constitute a taking, relevant to the petitioner's argument that Michigan cannot use its own statutes to define away constitutional property protections.
Webb's Fabulous Pharmacies, Inc. v. Beckwith
449 U.S. 155
Stands for the principle that a state cannot define what constitutes 'property' in a way that effectively reads the Takings Clause out of the Constitution—the anti-circularity rule central to petitioner's argument.
Armstrong v. United States
364 U.S. 40
States the foundational purpose of the Takings Clause: to bar the government from forcing some individuals to bear public burdens that should be borne by the public as a whole—directly applicable to a homeowner losing equity to benefit a county treasury.
United States v. 50 Acres of Land
469 U.S. 24
Addressed how to calculate 'just compensation' when the government takes property, relevant to the disputed question of how courts should measure the compensation owed to Pung's estate after the unconstitutional retention of surplus proceeds.
Legal Terminology
Analysis & Opinions
The Supreme Court rejected a constitutional challenge to tax foreclosure sales, holding that the longstanding practice does not violate the Fifth Amendment's takings clause or the Eighth Amendment's excessive fines clause. The case arose from the common situation where tax foreclosure sales produce prices far below what an ordinary sale would yield.
In a related ruling in Pung v. Isabella County, the Supreme Court sent the compensation dispute back to a lower court, agreeing that the baseline for determining "just compensation" is the price obtained in the tax sale, as long as the sale was conducted fairly. Justice Alito wrote the opinion for the court.