The U.S. Supreme Court ruled 9-0 that Isabella County, Michigan, did not violate the Constitution when it seized and sold a family's home over a $2,241.93 tax bill, and that local governments are not required to pay homeowners the full fair market value of property taken in tax foreclosures. The decision, written by Justice Samuel Alito, rejected the Pung family's decade-long argument that the Fifth Amendment entitled them to compensation based on what their home was actually worth, not what it fetched at a public auction.
The ruling is a significant win for local governments across the country that rely on tax foreclosure sales to collect delinquent property taxes. Ten states and the District of Columbia joined Isabella County in urging the court to reject the fair-market-value theory. But the case is not over. The justices vacated the lower court's decision and sent it back to the Sixth Circuit to examine whether the county's auction process itself was conducted fairly, a question the Supreme Court pointedly declined to answer.
The facts of the case are hard to read without wincing. The Pung family owned a roughly 3,000-square-foot home in Isabella County valued at approximately $194,400. The county revoked the home's Principal Residence Exemption, generating a tax bill of $2,241.93. National Review detailed how a local tax assessor named Patricia DePriest allegedly acted beyond the bounds of her office in pressing the exemption revocation, a claim the family's attorneys at the Pacific Legal Foundation have emphasized throughout the litigation.
The county foreclosed on the property and sold it at public auction for $76,008, less than half its assessed value. The family argued that more than $118,000 in equity was effectively destroyed. Isabella County eventually returned the surplus auction proceeds to the estate after the tax debt was satisfied, but the Pungs maintained that the Constitution required compensation at fair market value, not the discounted price of a distressed auction.
Isabella County's attorney, Matthew T. Nelson of Warner Norcross + Judd LLP, told Fox News Digital that the family had ample opportunity to avoid the outcome:
"We are confident the process Isabella County followed in this case exceeded what the law required. The simple fact is that Mr. Pung refused to pay the property tax due after litigating the matter through the entirety of the Michigan court system. After filing the federal lawsuit, Mr. Pung never challenged the adequacy of the auction procedures for the simple reason that the auction was conducted in a manner consistent with the law."
County court filings described Michael Pung, the personal representative of the family estate, as having repeatedly refused to submit paperwork to maintain the tax exemption, declined to appeal the assessment, and failed to pay the disputed bill despite receiving notices.
Justice Alito's opinion for the full court drew a firm line. The proper constitutional baseline, he wrote, is the price obtained at a tax sale, at least when the sale is fairly conducted, not a hypothetical appraisal of what the property might have sold for on the open market.
"Neither the Fifth nor the Eighth Amendment requires the government to compensate former owners based on the hypothetical fair market value of their property."
Alito illustrated the practical consequences of the Pung family's theory with a blunt hypothetical. If governments had to pay homeowners fair market value, a tax sale to collect $20,000 in delinquent taxes could net the government a $20,000 loss, "a loss paid out to the delinquent taxpayer himself." He called the possibility of such a result "perverse" and said it "would render tax sales infeasible as a debt-collection mechanism."
The court's logic was straightforward: governments have relied on tax sales for centuries. Requiring them to guarantee fair market value would upend that system and create a windfall for property owners who refuse to pay their taxes. The ruling tracks with the court's broader posture this term of resolving questions with clear, historically grounded rules, a pattern visible in other unanimous decisions this session.
The most striking language in the case came not from the majority opinion but from Justice Clarence Thomas, who wrote separately and was joined by Justice Neil Gorsuch. Thomas concurred in the result but refused to let the county off the hook morally or, in his view, constitutionally.
"What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional."
That sentence carries weight. Thomas did not dissent, he agreed that the fair-market-value theory was not the right legal standard. But he signaled that the process by which the county seized and sold the home may well have crossed constitutional lines, a question the court left for the Sixth Circuit to resolve on remand.
The Thomas-Gorsuch opinion is a reminder that unanimity on the bottom line does not always mean unanimity on the reasoning. Two of the court's most originalist justices saw something deeply troubling in what happened to the Pung family, even as they declined to impose a new compensation framework on every local government in the country. The court has shown a willingness to address individual rights and damages claims carefully this term, often drawing fine distinctions between the right legal theory and the right result.
Larry Salzman, the Pacific Legal Foundation attorney who represented the Pung estate, acknowledged disappointment but emphasized that the fight continues. He told Fox News Digital that the family now has "an opportunity to remedy the harms that were done to them" in the lower courts.
"It's disappointing because we believe that, at least in some cases, fair market value is demanded by the Constitution, and we're happy to see that at least Justice Thomas and Gorsuch agree on that point, but it's satisfying that we get to continue fighting the case for another day, that the case is no longer final and that the Pungs have an opportunity to remedy the harms that were done to them."
The Supreme Court explicitly declined to "resolve any of Pung's newfound contentions that the procedure the County followed in seizing and selling his property was unfair." That leaves the door open for the Sixth Circuit to examine whether Isabella County's auction process met constitutional standards, a question that could still produce a favorable result for the family.
The Associated Press reported that the ruling means homeowners are only entitled to the difference between the auction sale price and unpaid taxes, not a hypothetical fair-market-value surplus. But the remand ensures the Pungs' procedural arguments will get a fresh hearing.
The Pung case arrived at the Supreme Court in the wake of Tyler v. Hennepin County, the court's unanimous 2023 ruling that established local governments cannot simply pocket everything from a tax foreclosure sale beyond the amount of unpaid taxes. Tyler was a landmark for property rights. The question in Pung was whether Tyler's logic extended further, whether the Constitution requires governments to ensure homeowners receive fair market value, not just auction proceeds minus the tax debt.
The court said no. But the question will not go away. The Washington Examiner noted that the Pung family's lawyers argued in their brief that fair market value has historically been the baseline for just compensation: "When government takes more than it is owed, it crosses constitutional lines. The Fifth Amendment mandates just compensation; the Eighth Amendment forbids excessive fines as punishment."
The court rejected that framing, but the underlying tension remains. Tax foreclosure auctions routinely sell properties for a fraction of their market value. When a $200,000 home sells for $76,000 to cover a $2,200 debt, the gap between what the government collects and what the homeowner loses is enormous. The question is who bears the cost of that gap, and whether the Constitution has anything to say about it.
Nelson, the county's attorney, framed the ruling as a vindication of a necessary government tool. He told Fox News Digital that Isabella County and other Michigan counties "regularly make herculean efforts to help homeowners avoid foreclosure," but that "at the end of the day, foreclosure is a tool that needs to remain in their toolboxes."
That argument carried the day. But as the court's docket this term has shown, from pending rulings on federal power to decisions on individual constitutional claims, the justices are increasingly asked to draw lines between legitimate government authority and overreach.
Just The News reported that the Pacific Legal Foundation's senior attorney Christina Martin warned of the broader stakes before the ruling: "If Isabella County can with impunity confiscate the Pung's entire home over a small disputed tax bill, and force them into a decade of litigation to recover less than half of its value, any municipality could do it to anyone."
The Supreme Court did not endorse that outcome. It simply held that the Constitution does not require governments to guarantee fair market value at auction. The procedural question, whether the county's process was itself fair, now goes back to the Sixth Circuit. That court will have to examine how the auction was conducted, whether the Pungs received adequate notice and opportunity, and whether the process met due process standards.
The county says it followed the law and then some. The family says a local assessor's overreach cost them their home. Both sides will get another round in court.
For property owners across the country, the message from this court that has not been shy about enforcing constitutional limits, the ruling is sobering but not final. The Constitution does not guarantee you'll get what your home is worth at a tax auction. But it may still have something to say about how the government takes it from you in the first place.
When a family can lose a $200,000 home over a $2,200 tax bill and the highest court in the land calls the process legal, the question is no longer whether the system works. It's who it works for.
