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When a homeowner has their property seized to pay a tax debt, they’re supposed to be compensated for their equity in the home, after the taxes are collected. The Takings Clause in the U.S. Constitution stipulates that homeowners are entitled to “just compensation,” and long-standing court precedents hold that this compensation should be based on the fair market value of the home.
But in the case of Pung v. Isabella County, MI, the seized property was liquidated in a so-called fire sale auction, well below the fair market value of the home, and that sale price was used as the basis for compensation. As a result, years of equity the homeowner had accrued were wiped out.
In its amicus brief, AARP Foundation argues that the Supreme Court should confirm that fair market value must continue to be the standard for “just compensation” in such situations.