Pung v. Isabella County
The Supreme Court ruled that when a county forecloses on a home over unpaid taxes and sells it at a fairly run public auction, the Constitution only requires handing back the leftover money from that sale — not the home's full market value.
The decision keeps a centuries-old tax-collection tool intact nationwide, while leaving open a separate fight over whether Isabella County's own sale of the Pung family home was actually run fairly.
“That Pung’s novel interpretation of the Takings Clause would whisk this longstanding practice into the dust bin is strong evidence that his interpretation is incorrect.”
The majority's reasoning that a rule eliminating a centuries-old tax-collection practice is likely wrong.
How it got here: A federal district court gave Pung partial summary judgment limited to surplus proceeds and rejected his Eighth Amendment claim; the Sixth Circuit affirmed, and Pung asked the Supreme Court to review.
The Case in Depth
What happened
The Pung family in Michigan repeatedly fought and beat a local tax assessor's mistaken decision to charge them extra property taxes owed on what officials wrongly treated as a second home. Despite winning those disputes, the county eventually foreclosed over a $2,241.93 bill, took the family's home — assessed at $194,400 — and sold it at auction for $76,008, keeping the proceeds before litigation forced a partial refund.
The question before the Court
When a county sells someone's home to collect unpaid property taxes, does the Constitution require paying the home's full market value, or just the leftover money from the sale?
The Court's answer
No — the Constitution does not require the government to pay a foreclosed homeowner the property's hypothetical fair market value. The Court held that when a county sells a tax-delinquent home at a fairly conducted public auction, the Takings Clause only requires returning the surplus — the difference between the sale price and the tax debt — because that has been the accepted rule under centuries of English and American practice.
The Court applied the same reasoning to reject Pung's Eighth Amendment claim, finding no historical or legal support for treating a fairly conducted tax sale's surplus-only payout as an excessive fine. The ruling leaves open, for the lower court to decide on remand, whether Isabella County's own sale process met the 'fairly conducted' standard given how it handled notice and the size of the debt compared to the home's value.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Local governments across the country can keep using foreclosure and auction to collect unpaid property taxes without paying former owners the home's full appraised value — only the money left over after the tax debt is paid. Homeowners facing tax foreclosure retain a right to surplus proceeds but not a right to demand what their home would fetch on the open market, unless the sale itself was conducted unfairly.
What changes now
The case goes back to the Sixth Circuit, which must decide whether Pung's newer arguments — that the county's foreclosure and sale process itself was procedurally unfair, including whether it seized more property than necessary — were properly raised and, if so, address them. The Court's ruling settles only that fair market value is not the constitutional baseline; whether this particular sale was fairly conducted remains open.
What this does not decide
The Court did not decide whether Isabella County's specific foreclosure and sale process was fair, including claims that the county seized more property than necessary or failed to give adequate notice. Those procedural fairness questions were left for the Sixth Circuit to address on remand if properly preserved.
Concurrences and dissents
How the Justices voted
Majority (8). Justice Alito (author), joined by Justice Roberts, Justice Sotomayor, Justice Kagan, Justice Gorsuch, Justice Kavanaugh, Justice Barrett, and Justice Jackson.
Separate writings (1). Justice Thomas (author of a concurrence (in part)).
Concurrence — Justice Sotomayor
Justice Sotomayor joined the Court's opinion in full but wrote to clarify its limits. She emphasized that the majority is not defining what makes a tax auction 'fair,' nor endorsing any party's specific test for fairness, and that those questions are properly left for the lower court to address on remand.
Concurrence in part — Justice Thomas
“The government exists to protect property; property does not exist to support the government.”Justice Thomas's closing statement on the primacy of property rights over government efficiency.
Justice Thomas agreed that a fairly conducted tax sale's surplus can satisfy just compensation, but declined to join the part of the majority opinion applying that rule against Pung's specific arguments. Reviewing the history in detail, he argued that governments traditionally had to first pursue personal property or partial land before seizing an entire home, and that Isabella County's seizure of the whole $194,400 home over a $2,242 debt likely departed from that history and may have been unconstitutional. He would leave these issues open on remand. Read the full partial concurrence →
How the Court got there
The legal reasoning, step by step
- The Court asked what 'just compensation' means under the Takings Clause specifically in the tax-sale context, rather than applying the fair-market-value rule used in ordinary government land-grab (eminent domain) cases.
- It traced centuries of English and American practice, along with early federal statutes and prior rulings, all of which required only that the government return the 'surplus' — the difference between the auction price and the tax debt — not the property's full value.
- The Court explained that fair market value is not the only valid measure of just compensation even in eminent-domain cases, and that tax sales present a distinct situation because owners typically have advance notice and ways to avoid foreclosure altogether, such as refinancing or selling the property themselves.
- The Court reasoned that requiring fair-market-value payouts would often force the government to pay out more than it collected in taxes, turning tax collection into a net loss and making the practice impractical as a debt-collection tool.
- Because history and precedent supported only the surplus-proceeds rule, and Pung's competing precedents involved multiple pieces of property or eminent domain rather than a single-parcel tax sale, the Court concluded the auction price — not hypothetical fair market value — is the proper baseline, so long as the sale is fairly conducted.
- Applying the same historical-practice test used for the Takings Clause, the Court found no history or precedent showing that a fairly conducted tax sale returning only surplus proceeds counts as an excessive fine under the Eighth Amendment.
Doctrinal impact
Cases affected by this decision
Reaffirms Tyler v. Hennepin County (598 U. S. 631)
The Court relies on this recent ruling requiring surplus proceeds be returned as the foundation for today's holding.
Reaffirms BFP v. Resolution Trust Corp. (511 U. S. 531)
Used to support treating the actual sale price, not fair market value, as the relevant measure in foreclosure sales.