In Home Equity Theft Case, Supreme Court Says Auction Price Can Count—but Won’t Define a Fair Sale

The Supreme Court ruled on Tuesday in Pung v. Isabella County that the compensation owed to homeowners whose properties are sold at tax foreclosure auctions should be based on the auction price, not the potentially higher fair market value. This decision, authored by Justice Samuel Alito, represents a setback for the movement against home equity theft, which sought to ensure homeowners received the full market value of their seized homes. The Pung family, facing a tax bill of approximately $2,200 including interest and penalties, had their home sold at auction for $76,000. They argued that the difference between the auction price and the home's market value constituted a deprivation of equity. However, the Court held that the Constitution's "just compensation" clause is generally satisfied by the price achieved at a fairly conducted auction. While the ruling establishes the auction price as the primary benchmark, the Court's opinion includes a caveat regarding whether the sale was "fairly conducted." This leaves open a potential avenue for future legal challenges concerning the fairness of tax foreclosure sales, suggesting that the fight against home equity theft may continue by scrutinizing the conduct of these auctions.