As Rush might have called it, even if you choose not to pay, you still have made a choice. Geraldine Tyler was 93 years old, which is pretty old, even for olds. Maybe she was no longer capable of handling her own affairs. Maybe she had no one to help her, no family or friends, and so maybe she lacked the capacity to understand or act upon what was happening around here. But that’s not the beef.
The 93-year-old left her Minneapolis condominium in 2010 after a nearby shooting and a disturbing encounter left her uneasy. But she was unable to finance both her new apartment and the property tax on her erstwhile condo, accruing $2,300 in debt.
Over the course of the next five years, the government raised that debt by over 550 percent, tacking on almost $13,000 in additional penalties, fines, and interest. And when Tyler couldn’t pay that, it seized her property, sold it for $40,000—and kept the profit.
Last month, a federal appeals court ruled that was OK.
In 2010, Tyler had the wherewithal to decide to move out of her old condo to a new home. That’s entirely her choice, although it fails to offer much of an explanation as to why she didn’t sell the old condo, or rent it out, or do something with it knowing that she owned it, property taxes would accrue and would have to be paid. That’s part of the bundle of burdens with ownership. You may think property taxes are an evil, but they nonetheless exist and come due. That part is undeniable.
But to contend that they “seized her property, sold it for $40,000—and kept the profit,” is revealed by the Eighth Circuit’s decision as slightly less than accurate.
Property owners who owe outstanding taxes receive multiple notices of both the delinquent tax list and the action. Id. §§ 279.06, 279.09, 279.091. If no answer is filed, the district court administrator “shall enter judgment” against the property. Id. § 279.16.
The county auditor, on behalf of the State, then purchases each parcel associated with an unsatisfied judgment for an amount equal to the delinquent taxes, penalties, costs, and interest owed on each parcel. Id. § 280.01. This transaction occurs at a judgment sale; the title vests in the State “subject only to the rights of redemption” allowed by statute. Id. § 280.41.
In most states, a property with delinquent taxes is put up for public auction. Someone buying the property gets it free and clear of all liens. If there’s a mortgage, the bank may buy it to protects its interest. If not, then perhaps a speculator will buy it. The homeowner, of course, can buy it back, but if they had the ability to do so, they likely wouldn’t have lost it to a tax lien in the first place. And if she had the ability to sell it to pay off the tax lien, she would have done so herself, as that would be the way to recapture equity in the property.
But under Minnesota law, the county auditor buys the property for the amount of the lien rather than offering it for public sale, which might produce a profit, the amount of equity over and above the lien. It’s a harsh law, but it’s not as if it doesn’t provide safety valves for the homeowner.
During the statutory redemption period—which is three years for most properties—the former owner may redeem the property for the amount of delinquent taxes, penalties, costs, and interest. Id. §§ 281.01, 281.02, and 281.17. The county must notify the delinquent taxpayer of her right to redeem through multiple channels, including personal service. Id. § 281.23. A former property owner who wants to redeem but cannot afford to do so may make a “confession of judgment.” Id. § 279.37. A former owner who makes a confession of judgment agrees to entry of judgment for all delinquent taxes, and the State consolidates her tax delinquency into a single obligation to be paid in installments over five to ten years.
At any of these points, the homeowner has choices to make that will enable her to redeem the property upon which she failed to pay taxes, failed to sell, failed to rent, and left essentially neglected over a period of years.
Only after the final forfeiture had occurred did Tyler figure out it was time to do something about this property, and so instead of availing herself of the possibilities that she, as a homeowner, had at the outset, or she as a delinquent property tax payer had during the process, she then sued. That came after the entirety of the process was over and the state sold the property publicly for $40,000, thus creating a theoretical $25,000 profit that the state kept.
When Tyler stopped paying her property taxes in 2010, Hennepin County followed Minnesota’s tax-forfeiture scheme to collect her delinquent tax debt of $15,000. Tyler received notice of the foreclosure action and failed to respond. In April 2012, the county obtained a judgment against Tyler’s condominium. Tyler then received notice of her right to redeem, but she did not exercise her right to redeem or confess judgment during the three-year redemption period. The State took absolute title to Tyler’s condominium in July 2015, and thereby cancelled Tyler’s $15,000 tax debt. Tyler did not apply to repurchase the condominium. The county then sold the property to a private party in November 2016 for $40,000. The county distributed the net proceeds pursuant to Minn. Stat. § 282.08.
It’s hard not to be sympathetic to the plight of a 93-year-old woman. It’s also hard to be sympathetic toward the State of Minnesota, which not only enjoyed the excessive interest and penalties on delinquent taxes, but got a free and easy profit on its backend sale of the property. Would it have killed the state to turn the profit back to the property’s owner? Why should the state enjoy a windfall at the expense of Geraldine Tyler?
Then again, harsh law being harsh, it’s not as if Tyler didn’t have many choices to make along the way that would have ameliorated this harsh outcome, and she did nothing to prevent it until after it was too late. She made a choice. It just wasn’t a wise choice.
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