A Michigan family’s decades-long fight over a property seizure will soon be before the U.S. Supreme Court, marking the latest high-stakes challenge to how counties nationally handle property tax foreclosures.
This week, the Pung family filed their opening brief in Pung v. Isabella County. Represented by attorney Phil Ellison and the Pacific Legal Foundation, the case asks the nation’s highest court to decide whether local governments must compensate homeowners based on fair market value.
The plaintiffs also argue that the government should not be allowed to seize properties worth far more than needed to satisfy a tax debt.
The Center Square spoke with PLF Senior Attorney Christina Martin in an exclusive interview regarding the case, which will be decided in 2026.
“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,” Martin said. “Tax sales should be a last resort.”
The plaintiffs argue that this was not a last resort for the county, but that, at the time, Michigan counties were using property foreclosures to make profits.
The dispute dates back to 1994, when Scott Pung received an exemption on a small local tax. Over a decade later, after Scott and his wife had both died, the local tax assessor said that the family should have reapplied for the exemption following Scott’s death.
“The tax assessor was wrong: State law says the exemption continues as long as family members continue to live in the home,” Martin said. “Scott’s son still lived there. No further paperwork was necessary.”
The Pung family fought the assessment and initially won. But as legal challenges continued, Isabella County launched foreclosure proceedings over a disputed 2012 bill. That led to the county seizing the home, just 10 days after the family prevailed in the Michigan Court of Appeals for earlier tax years.
“The home was worth nearly $200,000 and all the properly imposed taxes were paid,” Martin said. “The Pungs tried to get the home back, but the county fought them every step of the way, refusing to allow the Pungs to even pay the improperly imposed debt to recover the home.”
The county eventually auctioned the home for $76,000 – keeping all the money it profited. A federal court later concluded that Isabella County only needed to return the surplus proceeds from the auction, not the full value of the home the family lost.
The plaintiffs argue that the house being sold under its proper home value “destroyed” equity in an “unnecessary auction” and that they are due fair market value from the county, not just what is surplus from the auction.
“The Takings Clause [in the Fifth Amendment] requires just compensation when the government takes your private property,” Martin said. “While the government has an option to forcibly sell private property to collect unpaid taxes, it must act reasonably. It has to avoid unnecessary tax sales, which means it should never be forcibly auctioning homes to collect relatively tiny debts or improperly imposed debts.”
The Supreme Court will consider whether the government must pay fair market value, rather than auction surplus, when it takes property. It will also hear arguments about whether Isabella County imposed an excessive fine in violation of the Eighth Amendment, especially since plaintiffs argue the underlying tax debt should never have existed.
This case follows the foundation’s 2023 Supreme Court victory in Tyler v. Hennepin County, which barred the government from taking more than what is owed in tax foreclosures.
Now, this case asks the court to go even further, in a decision that will have broad implications for homeowners nationwide.
Martin is hopeful the court will decide in the plaintiffs’ favor, making it “more likely for states and local governments everywhere to be more thoughtful when seizing property for taxes and less careless when selling it.”
Oral arguments in the case are expected in early 2026.
Martin noted that the PLF has several other Michigan-related petitions pending before the Supreme Court, challenging counties’ continued attempts to keep more than what is owed in tax foreclosures despite a state statute.
“Thirty counties failed to remit a single penny,” Martin explained. “We are urging the court to grant review to hold that this failure to remit just compensation violates the Takings Clause and that the procedures themselves violate due process.”
