Policy Brief: Tyler v. Hennepin County in 2024

On May 25, 2023, the US Supreme Court handed down its decision in Tyler v. Hennepin County, making a significant incursion into the state and local government practice of property tax foreclosure.

In short, the Tyler decision posits that tax foreclosure is solely a debt collection tool and that local governments can recover only what they are owed in a tax foreclosure and no more. According to the Court, the failure of the state or local government to provide the former owner or other interested party an opportunity to obtain this “surplus” value, if any exists, violates the Takings Clause of the 5th Amendment of the US Constitution.

The decision has left local governments to work with state legislatures to identify and draft necessary reforms to state law while defending dozens of lawsuits from former owners of tax-foreclosed property who claim they were denied excess value in their homes.

This brief, published in October 2024, is a resource for local government officials and lawyers, land banks, and state policymakers working to respond to the Tyler ruling.

This brief includes:

• A summary of what Community Progress has observed in state and local policy environments since the ruling. This section covers lawsuits filed after the Tyler decision, state-level reforms and reform climate, and the involvement of homeownership advocates in reform efforts.
• Policy recommendations for communities reforming their tax enforcement systems. The Tyler decision presents an opportunity for leaders and advocates on the local level to reimagine a more equitable, efficient, and effective delinquent tax enforcement system. This list refines and expands on the policy recommendations in our August 2023 policy brief.

Community Progress is committed to helping communities navigate policy reform related to property revitalization. For over 15 years, we have worked closely with state and local leaders and community advocates to reform state laws and practices to address vacant, abandoned, and deteriorated (VAD) properties—including reforms related to property tax systems, code enforcement systems, and land banking.

Questions? Contact Matt Kreis, General Counsel, [email protected].