SCOTUS Considers Constitutionality of State Tax Foreclosure Practices - Holland & Knight
The U.S. Supreme Court is considering the constitutionality of Michigan's tax foreclosure and auction practices in the case Pung v. Isabella County, which may impact how states handle property seizures for unpaid taxes. During oral arguments, justices discussed concerns about procedures that can lead to depressed sale prices and significant loss of homeowner equity, raising questions under the Fifth and Eighth Amendments. Tax attorney Jennifer Karpchuk highlighted tensions between current foreclosure methods and the legal protections for homeowners.
In the Headlines
February 26, 2026
SCOTUS Considers Constitutionality of State Tax Foreclosure Practices
Thomson Reuters
Tax attorney Jennifer Karpchuk was quoted in a
"Multiple justices recognized that the foreclosure and auction process, specifically in Michigan, can depress prices through procedures such as cash-only requirements and no property inspections," she said, adding that some also "expressed discomfort with a system that allows a government to destroy most of a homeowner's equity to collect a trivial debt."
Thomson Reutersarticle covering U.S. Supreme Court oral arguments inPung v. Isabella County, a case that could significantly affect how states conduct tax foreclosures and what constitutional protections apply when a property is seized and sold to satisfy unpaid taxes. The dispute centers on whether Michigan's foreclosure and auction procedures – which can result in sales at depressed prices and the loss of substantial homeowner equity for relatively small property tax debts – violate the Fifth Amendment's Takings Clause and/or the Eighth Amendment's Excessive Fines Clause. Ms. Karpchuk noted that the case highlights tension between the way some foreclosure auctions are structured and the operational challenges counties would face if required to secure fair market value in every sale."Multiple justices recognized that the foreclosure and auction process, specifically in Michigan, can depress prices through procedures such as cash-only requirements and no property inspections," she said, adding that some also "expressed discomfort with a system that allows a government to destroy most of a homeowner's equity to collect a trivial debt."
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