CONSTITUTIONAL INTERPRETATIONS

In Pung v. Isabella County, U.S. Sup.Ct. Slip Op. of June 23, 2026, the Supreme Court ruled that the “Just Compensation Clause” of the Fifth Amendment to the United States Constitution required the payment of any surplus proceeds from a foreclosure sale of property to collect a delinquent tax to the owner of the sold property. The Court further ruled that in an ordinary foreclosure tax sale that followed historical foreclosure procedures, the “Just Compensation Clause” did not entitle the owner of the sold property to the “fair market value” of that property, even when the sale resulted in a significant loss below its “fair market value.”  

The Just Compensation Clause reads as follows:

[N]or shall private property be taken for public use, without just compensation.

U,S. Const., Amendment V.

The unambiguous language of that Clause promises the owners of private property nothing more than “just compensation” for the “public use” of their property after it has been “taken” from them. Under the circumstances of a foreclosure sale of an owner’s property to collect a tax that he or she owes, the “public use” of the owner’s formerly “private” property is usually limited to the operation of a public lien against the property for the amount of the unpaid tax. If the lien is paid off from the proceeds of a foreclosure sale, the “public use” of the property ends, leaving the former owner with no claims against the tax collector under the “Just Compensation Clause” beyond the amount of any surplus proceeds the tax collector himself or herself realizes from the execution of the lien. To get the “fair market value” of his or her property, the owner has to pay the tax that is due before the public’s lien takes effect. That is how tax liens have historically worked, and the “Just Compensation Clause” was never meant to interfere with the collection of taxes.

Of course, the tax collector, and the courts in which he or she operates, have to follow the Fifth and Fourteenth Amendment’s Due Process of Law Clauses as well when they “deprive” a property owner of his or her property rights. The Court did not discuss how those Clauses might affect the property owner’s claims in this particular case, other than leaving all of that up to the lower federal courts to manage.

/s/ Dan D. Rhea