In Tyler v. Hennepin County, decided in 2023, the Supreme Court ruled unanimously that a local government violates the Fifth Amendment’s Takings Clause when it seizes a home for unpaid taxes, sells it, and keeps sale proceeds that exceed the tax debt.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota If your property is sold for more than you owe in taxes, penalties, interest, and costs of sale, that surplus equity is yours.
What the Supreme Court Held
Chief Justice John Roberts wrote the opinion for all nine justices. The core principle: a county can sell a property to recover delinquent taxes, but it cannot use that process to confiscate more value than it is owed. Roberts described Hennepin County’s action as a “classic taking in which the government directly appropriates private property for its own use.”1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota
A state legislature cannot define the problem away by declaring that an owner’s interest is extinguished at forfeiture. Minnesota’s statute did exactly that, and the Court held it unconstitutional anyway. The state controls the mechanics of its tax collection, not the constitutional question of who owns the surplus.
One procedural detail worth knowing: the Court did not award Geraldine Tyler damages. It reversed the Eighth Circuit’s dismissal of her case and sent it back, holding only that she had “plausibly alleged” a constitutional violation.2Justia. Tyler v. Hennepin County, 598 US (2023) But the constitutional rule was stated in absolute terms and binds every government in the country.
The majority ruled only on the Fifth Amendment. Justice Neil Gorsuch, joined by Justice Ketanji Brown Jackson, wrote separately to argue that keeping the surplus also violates the Eighth Amendment’s Excessive Fines Clause. That concurrence is not binding precedent, but it signals how at least two justices would rule if the question returns.
The Facts of the Case
Geraldine Tyler owned a Minneapolis condominium. She moved into a senior apartment building in 2010 and stopped paying property taxes. Her original debt was about $2,300, but accumulated interest and penalties pushed the total to roughly $15,000.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota After a three-year redemption period expired, Hennepin County seized the condo and sold it for $40,000. The county kept all $40,000, including the $25,000 that exceeded Tyler’s debt. She sued in federal court.
Which States Were Affected
Before the ruling, roughly fourteen states and the District of Columbia allowed the government to keep surplus equity from tax foreclosure sales. Tyler’s petition identified Alabama, Arizona, California, Colorado, Illinois, Maine, Massachusetts, Minnesota, Montana, Nebraska, New Jersey, New York, Ohio, and Oregon, though California and Ohio retained surplus only in limited public-use situations.1Supreme Court of the United States. Tyler v. Hennepin County, Minnesota
Most of these states have since changed their laws. Minnesota passed a comprehensive overhaul in 2024 that requires competitive auctions and proactive notice to former owners about surplus claims. New York amended its Real Property Tax Law retroactive to the date of the decision. Colorado, Arizona, Alabama, South Dakota, Idaho, and Wisconsin passed reforms in 2024, with Oregon, Ohio, Arkansas, and California following in 2025. As of early 2026, Illinois is the notable outlier that has not enacted surplus-equity legislation.
Reforms generally take one of two forms. Some states require a public auction and return of any surplus to the former owner. Others allow sale through a licensed real estate broker at fair market value, with excess proceeds distributed after costs. Both routes end in the same place: the government recovers what it is owed and no more.
Who Actually Gets the Surplus
Even after Tyler, you are not necessarily entitled to every dollar above the tax bill. Surplus funds follow a priority order, and other creditors often sit ahead of the former owner.
- The foreclosing authority takes its taxes, penalties, interest, and sale costs first.
- Junior lienholders come next. A mortgage, second lien, HOA assessment, or judgment lien recorded against the property before the sale is typically paid out of the surplus in the order it was recorded.
- Whatever remains after those claims and costs goes to you.
This is where many former owners are caught off guard. If a mortgage balance was close to the property’s value, the surplus left for you after paying the lender and other secured creditors may be small or nothing at all. Tyler guarantees your right to true surplus equity; it does not erase legitimate claims by other secured creditors. Before investing time in a claim, find out what liens were attached to the property at the time of the sale.
How to File a Surplus Claim
There is no single federal process. Procedures vary significantly by state and sometimes by county. Some states handle claims administratively through the county treasurer or tax collector. Others require a petition in court. A few, like Oregon, route unclaimed surplus through the state unclaimed-property system.
Common elements show up across most jurisdictions. You will need to identify the property by parcel number and the date of the foreclosure sale, and show you were the owner at the time of forfeiture. Counties typically keep records of tax sales and resulting surplus amounts in the treasurer’s office or the clerk of court, and many provide claim forms online.
Expect to give notice to other parties who held liens on the property. If a mortgage company or other creditor had an interest, the county or court usually requires you to notify them so competing claims can be sorted before any money is released. Skipping that step can delay the claim or trigger a denial that forces you to start over.
An attorney is not always required, but claims that involve competing lienholders or large sums are worth professional help. Be careful about third-party “surplus recovery” companies that contact former homeowners and charge 30% to 50% of the recovered amount. Some are legitimate; many charge heavily for work you could do yourself or hire a local attorney to handle for a fraction of the cost.
Deadlines Are Short and Vary by State
This is the detail most likely to decide whether you recover anything. Depending on the state, you may have as little as 60 days or as long as five years from the foreclosure sale to file your claim. Miss the deadline and the surplus typically escheats permanently to the state or local government.
Some states allow only 90 days. Others give two years from the date of sale or from the court’s confirmation of the sale. Several allow three to five years. The clock usually runs from the sale itself, though in some jurisdictions it starts at confirmation or when a deed is recorded. If you suspect surplus funds exist from a past tax sale, check your state’s deadline first, before gathering records or calling an attorney.
If your home was sold before the Tyler ruling, retroactivity becomes a separate question. Some states made their reform legislation retroactive to the date of the decision in May 2023. Others apply only to sales after the new law took effect. A federal takings claim carries a six-year statute of limitations.3Office of the Law Revision Counsel. 28 USC 2501 – Time for Filing Suit Where a state’s administrative process will not reach your old sale, a federal constitutional claim under the Takings Clause may still be available, but that is attorney territory.