Pung v. Isabella County is a pending U.S. Supreme Court case that asks whether a homeowner who loses property to a tax foreclosure must be paid the full fair market value of the home or only whatever the government managed to get for it at auction.1Supreme Court of the United States. Docket for No. 25-95, Pung v. Isabella County The Court heard argument on February 25, 2026, and a decision is pending. The gap in the Pung family’s own case is more than $118,000, and the rule the Court chooses will apply to tax foreclosures across the country.
The Facts Behind the Case
The Pung family fell behind on property taxes in 2013, with an unpaid balance of $2,241.93. Isabella County obtained a foreclosure judgment in 2015 and sold the home at public auction for $76,008. The claimed fair market value was $194,400.2Legal Information Institute. Pung v. Isabella County, Michigan Under Michigan’s General Property Tax Act as it then stood, the county kept the entire $76,008, returning nothing to the family.3Michigan Legislature. Michigan Code 211.78k – Petition for Foreclosure That is a surplus of roughly $73,766 kept by the government on a tax debt just over $2,200, and a loss of nearly $118,000 in equity measured against the home’s claimed market value.
The Question the Supreme Court Is Deciding
Michael Pung sued in federal court after the auction. The county conceded it owed him something but argued the surplus should be calculated from the auction price. Pung argued the measure must be fair market value. The numbers show why the choice matters: under the auction-price method, the surplus is about $73,766; under fair market value, it is roughly $192,158.2Legal Information Institute. Pung v. Isabella County, Michigan
That difference exists because tax auctions almost always produce prices well below market value. Bidders face title uncertainty, possible liens, and properties they often cannot inspect, and bids reflect that risk. If the government can seize a home, sell it cheaply, and cap the owner’s recovery at the auction result, the owner still loses a large share of their equity.
The Court is weighing two constitutional questions. The first, under the Fifth Amendment’s Takings Clause, is whether just compensation must be measured by fair market value rather than the depressed auction price. The second, under the Eighth Amendment’s Excessive Fines Clause, is whether forfeiting a home worth far more than the tax debt is itself an excessive fine.4Constitution Annotated. Intro.9.4.11 Pung v. Isabella County – Foreclosures, Excessive Fines, and Just Compensation
How the Lower Courts Ruled
The federal district court agreed that keeping the surplus was a taking but measured damages using the auction price. It awarded Pung $73,766.07, the auction proceeds minus the tax debt, plus interest from the date of the sale.5Justia Law. Michael Pung v. Peter Kopke, No. 22-1919 (6th Cir. 2025)
The Sixth Circuit affirmed. Its reasoning was that a properly conducted public auction is the best available evidence of a property’s value, and the former owner is entitled to the sale price minus the debt “and no more.” The court rejected the use of appraisals or comparable sales to replace the auction result.5Justia Law. Michael Pung v. Peter Kopke, No. 22-1919 (6th Cir. 2025) The Sixth Circuit also rejected the excessive-fines theory, holding that Michigan’s tax foreclosure process is civil debt collection rather than punishment, which puts it outside the Eighth Amendment.4Constitution Annotated. Intro.9.4.11 Pung v. Isabella County – Foreclosures, Excessive Fines, and Just Compensation The Supreme Court granted certiorari on October 3, 2025.1Supreme Court of the United States. Docket for No. 25-95, Pung v. Isabella County
The Precedent That Set It Up
Two earlier decisions pushed the surplus-equity question to this point. In 2020, the Michigan Supreme Court held in Rafaeli LLC v. Oakland County that keeping surplus foreclosure proceeds violated the state constitution’s protection against uncompensated takings, and that the former owner is entitled to the excess over the delinquent taxes, interest, penalties, and fees.6Michigan Courts. Rafaeli LLC v Oakland County, No. 156849
Three years later, a unanimous U.S. Supreme Court reached the same conclusion under the Fifth Amendment in Tyler v. Hennepin County. Chief Justice Roberts wrote that the government “could not use the toehold of the tax debt to confiscate more property than was due,” and that “a taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed.”7Supreme Court of the United States. Tyler v. Hennepin County, No. 22-166 Tyler settled the basic rule: governments must return the surplus. It did not settle how to measure the surplus. That is the gap Pung asks the Court to fill.
What a Ruling Could Change for Homeowners
If the Court holds that fair market value is the constitutionally required measure, state and local governments would need to rethink how they run tax sales. Counties could face pressure to market properties more aggressively, obtain appraisals, or set minimum bids tied to assessed value rather than just the amount of back taxes. Owners in pending cases could seek substantially larger awards, and owners facing future foreclosure would have a meaningful floor: even a badly run forced sale could not cost them more than the taxes they actually owed.
If the Court upholds the auction-price approach, the Sixth Circuit’s rule stands. Owners will continue to recover only what the auction produced, which is almost always well below the home’s real worth. In the Pung family’s case, that approach returned less than 40% of the claimed value of the home.
If You Already Lost Property in Michigan
Whatever the Supreme Court decides about the measure of compensation, Michigan already has a statutory process for recovering surplus proceeds. Public Act 256 of 2020 added Section 78t to the General Property Tax Act, creating a formal claims mechanism for former owners and other lienholders.8Michigan Legislature. Michigan Code 211.78t – Remaining Proceeds The first step is Michigan Treasury Form 5743, the Notice of Intention to Claim Interest in Foreclosure Sales Proceeds. It must be notarized and delivered to the foreclosing county by July 1 in the year of the foreclosure.9Michigan Department of Treasury. Form 5743 – Notice of Intention to Claim Interest in Foreclosure Sales Proceeds Missing that deadline forfeits the right to any surplus from that foreclosure, regardless of how Pung is ultimately decided.