The Supreme Court Answers Some Questions Left Open by Tyler v. Hennepin County

In 2023 the Supreme Court of the United States decided in Tyler v. Hennepin County, 598 U.S. 631 (2023), that where the government—whether federal, state, or municipal—takes land for the nonpayment of taxes, the taxpayer is entitled to compensation for any surplus equity in such property that exceeds the debt owed. This principle made it clear that a foreclosing government is not entitled to a windfall from land taken for nonpayment of taxes.

Recently in Pung v. Isabella County, decided by the Supreme Court on June 23, 2026, the Court considered whether a taxpayer is entitled to compensation based on the actual sale price of taken land, or its theoretical fair market value. The Pung property had been taken for unpaid taxes totaling $2,241.93, and while the property had an assessed value of $194,400, it sold at auction for only $76,008. The Pungs argued that fair market value is the appropriate baseline for evaluating surplus equity and that the procedure used for the seizure and sale of the family property was unfair. The Supreme Court ruled that “the proper baseline under the Takings Clause is the price obtained in a tax sale, at least when the sale is fairly conducted in light of our country's history of tax sales” and determined that the procedural argument relating to the fairness of the sale in question was not properly before the Court. While questions of fairness and process have been put off to future proceedings, the takeaway appears to be that where reasonable efforts are made to conduct a fair sale or auction of taken property, the surplus owed to the taxpayer will be determined based on the actual sale price. 

In Massachusetts, G.L. c. 60 was amended in 2024 following the Tyler decision and now contains requirements for foreclosing municipalities designed to avoid the type of dispute discussed in Pung. As amended, G.L. c. 60, §64A permits a foreclosing municipality to either retain taken property or to sell it to recover the taxes owed. For property that is retained, the foreclosing municipality must obtain an appraisal and surplus equity is determined on the basis of the highest and best use of the property as of the date of the final judgment of foreclosure. Where property is sold, the property must be listed with a licensed real estate agent for a period of 12 months, and if unsold after such time it may be auctioned, but only if an appraisal is obtained and no bids less than two-thirds of the appraised value are accepted. In both cases, these procedures are likely to withstand scrutiny as they designed to promote a level of compensation that approximates the fair market value, going beyond what is required by the Supreme Court’s decision in Pung.