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Supreme Court looks at a Minneapolis grandmother's case involving home equity theft

AILSA CHANG, HOST:

Today, the Supreme Court heard its last scheduled argument of the term, a case brought by a 94-year-old widowed grandmother in Minneapolis whose condominium was seized for failure to pay property taxes. Now, the case is important because Minnesota is one of 20 states that handle the sales of such defaulted properties without sharing the proceeds with the previous owner. And as NPR legal affairs correspondent Nina Totenberg reports, today's argument suggests that grandma is likely to win.

NINA TOTENBERG, BYLINE: Geraldine Tyler bought her condo in 1999 and lived there until 2010, when at age 81, she moved to a senior living center at the urging of her children. It's undisputed that after that, she failed to pay her property taxes on the condo, despite being repeatedly notified that she risked losing it if she didn't pay up. By 2015, she owed $15,000 in unpaid taxes, interest and fees, and the county, after offering her a tax payment plan for seniors as well as other options, seized the condo and sold it at public auction for $40,000. In the Supreme Court today, Tyler's lawyer argued that the county unconstitutionally took the property by keeping the $25,000 over the amount owed in back taxes. Lawyer Christina Martin said that amounts to a taking of property without just compensation, something that the Constitution explicitly forbids. Chief Justice Roberts noted that traditionally such matters are left to state law. And indeed, at the founding, some states did have laws like Minnesota's. Justice Sotomayor followed up.

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SONIA SOTOMAYOR: OK, here you have a debtor who basically doesn't want to do anything. What's the county supposed to do to protect itself?

TOTENBERG: Justice Alito noted that some cities impound cars when the owner has unpaid taxes or tickets, and if the amount due is not paid, the cars are sold. Would the city have to share the proceeds with the owner? Answer - yes. Justice Kagan - what if the property is abandoned? Lawyer Martin said the owner still could have a property interest. But if these appeared to be difficult questions, they were nothing compared to the increasingly overt hostility that faced lawyer Neal Katyal representing Hennepin County. He opened and spent a good deal of time trying to persuade the court that Mrs. Tyler had no legal standing to sue because at the time of the sale, she had no equity in the house. Under state law, the seizure automatically cancelled her debts on the condo - debts totaling $59,000 in mortgage payments and condo fees. Katyal got nowhere with any of the justices, and when he referred to the Statute of Gloucester in 1278, Justice Gorsuch could contain himself no longer.

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NEIL GORSUCH: Tyler was not a vassal owing fealty to her lord, but a modern-day, fee simple owner of real property. I just don't understand what on Earth any of that history has to do with this case.

TOTENBERG: Katyal repeatedly pointed the justices to the court's 1956 ruling upholding a law like Minnesota's, and that prompted this from Justice Kagan.

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ELENA KAGAN: My question is, are there any limits on that? Take a $5,000 tax debt and a $5 million house, and the state says, thanks we'll keep it.

TOTENBERG: That's nothing like this case, Katyal replied, noting that Tyler had affirmed in writing that she wanted nothing to do with the condo. That, he argued, constituted an abandonment of the property. But justices, both conservative and liberal, didn't seem to be buying the argument. Here, for instance, is the conservative Roberts.

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JOHN ROBERTS: What's the point of the takings clause? I mean, that was something that was pretty important to the framers. Why did they put that in there?

TOTENBERG: Justice Kavanaugh made a similar observation.

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BRETT KAVANAUGH: Why would we read the Constitution to disfavor real property, though? That seems very counterintuitive.

TOTENBERG: And liberal Justice Jackson noted that while 19 states may have laws like Minnesota's, the majority do not.

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KETANJI BROWN JACKSON: Most states allow for some sort of a surplus or have some sort of mechanism to give the money back to homeowners. So what is the big practical problem that we would face?

TOTENBERG: If there are such problems, it appeared that the justices will worry about them later, not sooner. Nina Totenberg, NPR News, Washington.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

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Nina Totenberg is NPR's award-winning legal affairs correspondent. Her reports air regularly on NPR's critically acclaimed newsmagazines All Things Considered, Morning Edition, and Weekend Edition.
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