Government shouldn’t profit from seized property

Belmont, North Carolina – April 17, 2013: Victorian-style homes in the Eagle Park neighborhood development. (bauhaus1000/Getty Images/iStock)

Government shouldn’t profit from seized property

Washington Examiner May 02, 12:00 AM May 02, 12:00 AM Video Embed

In a constitutional republic, the government should not take something of more value from someone than that person owes.

The U.S. Supreme Court heard a case last week testing that proposition. If the court affirms it, as analysts expect, a long-standing abuse will be ended, and common sense will prevail. When appropriate cases arise, the justices should also be willing to rein in other ways the government seizes property without proper compensation. So should legislators at every level.


Last week’s case, Tyler v. Hennepin County, arose when a Minnesota county confiscated the home of a 93-year-old woman who owed $15,000 “in property taxes, penalties, interests, and costs” and then turned around and sold the home for $40,000 — without paying the woman the $25,000 net profit.

As her certiorari petition notes, “Most states allow the government to keep only as much as it is owed; any surplus proceeds after collecting the debt belong to the former owner.” But in Minnesota and 12 other states, the government keeps the surplus, leaving the owner out of luck and out of pocket. Somebody can pay mortgages and taxes on a home for decades but then fall into arrears due to health problems and lose not just the amount of the arrears but the entire equity of a quarter-century or more.

This is patently unfair. Fortunately, the petitioners made a strong case that it is also unconstitutional. They argued that when the government profits from foreclosures, it violates both the Fifth Amendment, which bars the government from taking private property without just compensation, and the Eighth Amendment, which says the government may not impose excessive fines. These are principles that long predate the Constitution itself. An amicus brief filed by Ohio’s Buckeye Institute noted that William Blackstone, the renowned English jurist on whose work James Madison and other founders heavily relied, wrote that “whenever the government seized property for delinquent taxes, it did so subject to an ‘implied contract in law to … render back the overplus.’”

Longtime court watchers wrote after last week’s Supreme Court arguments that almost all the justices seemed to agree that Minnesota’s practice was constitutionally unacceptable. It wasn’t just the conservative justices whose questions seemed to side with the elderly homeowner, but at least two of the liberal justices as well. Rookie Justice Ketanji Brown Jackson, according to SCOTUSblog, noted “that the home-forfeiture scheme ‘feels very punitive’ in light of the potential for ‘massive differences’ in how much equity the county could retain, based solely on the particular value of a home.”

We can reasonably hope, therefore, that the justices will end this sort of exploitation of foreclosure powers. But the Supreme Court has left significant gray areas in the parallel issue of “asset forfeitures,” in which law enforcement agencies seize property suspected of being connected to a crime and make it extremely difficult for owners to reclaim the assets.

In an Alabama case this year, for example, officials seized a car used by an alleged drug trafficker. The car belonged to his mother, who had nothing to do with the case. When charges were dropped, the mother found that the municipality had sold her vehicle. She lost a car she didn’t know her son was alleged to have misused in a crime for which he was not convicted or punished.

The Supreme Court, in the past 40 years, has narrowed but not eliminated the asset-forfeiture powers of local governments. The plaintiffs in last week’s Tyler v. Hennepin County case specifically cited those earlier asset forfeiture cases to support their arguments against foreclosure abuses. But in recent years, the high court has declined to hear other cases seeking more clarity on asset forfeitures.

We leave it to the court to parse the fine points of legality and constitutionality of these two similar practices. The imperative, though, is to eliminate the need for court review. County, state, and federal legislators should recognize how unjust it is for governments to rake in extra cash by violating basic property rights.


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