The U.S. Supreme Court is photographed, on Thursday, June 25, 2026, in Washington. (AP Photo/Rahmat Gul) In 2019, Isabella County, Mich., seized Timothy Pung’s family home over a disputed tax debt of roughly $2,000. The county sold the house — worth nearly $200,000 — for just $76,000. Months later, the buyer resold it for $195,000. The result was that the Pung family walked away with less than half the market value of their home, due to a small tax debt they contended they never owed.
Last month, the U.S. Supreme Court decided that property owners aren’t entitled to fair market value when the government seizes and sells their home to satisfy a debt — but that the process at least has to be fair. The court sent the Pungs’ case back to a lower court to decide whether the auction of their home satisfied that standard. As Justice Clarence Thomas wrote in his concurrence, “What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional.”
Most people would find wiping out someone’s home equity — which people build up for years and rely on for retirement or a child’s college fund — deeply troubling. At the Supreme Court, the Pungs had argued that the Fifth Amendment requires governments to make them whole for that equity, and they were therefore entitled to fair market value. But at oral argument, it became clear that some of the justices had reservations about requiring the government to give them fair market value in every case. The fact is, forced sales almost always produce depressed prices. As Justice Samuel Alito observed in his opinion, they are inherently “incompatible” with ordinary methods of maximizing price.
So while the justices seemed troubled by the injustice of the facts, they had at least some sympathy for the government, too. During oral arguments, Alito put it colorfully: What did the homeowners expect the government to do? Figure out what the taxpayer owns and sell that first? Should it be forced to go after a Peloton exercise bike or a “gigantic TV” before seizing the house? How is it supposed to know what people own?
The courtroom laughed. But as Thomas noted in his separate opinion, there were indeed alternatives to seizing the Pung family home — including going after personal property, bank accounts or vehicles — that governments have been expected to exhaust before resorting to the nuclear option of taking someone’s house. That’s especially true when the tax debt is small. And at oral argument, the government’s attorney admitted that the county would have proceeded with the sale if the debt was even smaller and the family had underpaid by just $100 rather than $2,000. One Michigan county even seized a home when the owner inadvertently underpaid by $8 — less than the cost of a Chipotle burrito.
When the government does take the extraordinary step of seizing a person’s home for a tax debt, that comes with constitutional obligations. As the Pungs’ attorney put it, “when a client doesn’t pay my bill, I don’t get to go seize their whole entire house.” The Supreme Court unanimously affirmed that the government can take that step, but the process must at least be fair.
In the Pungs’ case, Michigan’s auction procedures were practically designed to produce low prices. Homeowners were barred from bidding on their own properties. There were no minimum reserve prices, no pre-auction inspections allowed, and no requirement that the government list the property through a broker first. The depressed sale wasn’t an unfortunate accident — it was a predictable result of how the county ran its auction scheme.
Other states have found fairer approaches — requiring market-rate listings before auction, setting minimum strike prices and building in judicial review. These are basic guardrails that ensure the government collects what it’s owed without pocketing what it isn’t. And in the majority opinion, the court specifically pointed out procedures that might lack those guardrails: “a sham sale” or a locality that “needlessly delay[s] a tax sale while real estate prices crash.”
Once the government takes your home, the Constitution doesn’t ask whether you were a model citizen, or whether doing what’s right will put an end to a practice that the government uses to collect debts. It requires the government to provide “just compensation.” Now it is up to the 6th Circuit Court of Appeals to decide whether the Pungs will be made whole.
Anastasia Boden is Director of Constitutional Scholarship at Pacific Legal Foundation, which represented the Pungs in their lawsuit against Isabella County.
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