Pung v. Isabella County, Docket No. 25-95

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The Pung family's home in Michigan was worth nearly $200,000. They owed the county $2,242 in property taxes. The county foreclosed and sold the house at auction for $76,000. Pung sued to argue that he should have received fair market value for the forced sale of his home. The Supreme Court has ruled selling at auction price is constitutional. The decision raises urgent questions about how far government can go when collecting debts from ordinary Americans.

What Happened to the Pung Family

Isabella county assessed Michael Pung with $2,242 in additional property taxes. He disagreed, sued and had won his case in state court. But the county ignored that ruling and moved forward with foreclosure anyway. They sold his home at a public auction for $76,008. The county kept all the money from the sale at first but eventually returned the sale price minus the tax assessment.

For tax purposes, the county had recently assessed the home at $194,400.

Pung sued in federal court, arguing the Constitution requires the government to pay him the difference between the auction price and the fair market value. He pointed to the Fifth Amendment, which says the government must pay "just compensation" when it takes private property. He also cited the Eighth Amendment, which prohibits excessive fines. The lower courts agreed he deserved the auction money back, but they refused to require the county to pay him fair market value of the home.

The Supreme Court's Decision

The Supreme Court agreed the Constitution does not require the government to pay fair market value when it sells a home to collect unpaid taxes. As long as the sale is conducted fairly, returning whatever money is left over after paying the debt is enough.

Justice Alito, writing for the majority, based this conclusion on centuries of legal tradition. English common law and early American tax laws all followed the same pattern: return the surplus, but don't guarantee the homeowner gets what the property might sell for on the open market. The Court said tax sales are different from cases where the government takes your land to build a highway. In those situations, fair market value is required. But tax sales, the Court reasoned, are a debt collection tool, and homeowners have years to pay the debt, refinance, or sell the property themselves before losing it.

The Court worried that requiring fair market value would make tax sales impossible to conduct. Local governments would have to manage properties and absorb financial losses in ways that would break the system. The case was sent back to lower courts to decide whether the county's sale process was actually fair.

What One Justice Said That Matters

Justice Thomas agreed with the outcome but wrote separately with serious concerns. He described how the tax assessor in this case defied a court order, imposed an unauthorized tax, and pursued foreclosure even though the Pungs claimed they never received proper notice. The assessor reportedly said, "I don't care what he says," referring to the judge who had ruled in the family's favor.

Thomas argued that fair market value should normally be required by the Constitution, with only narrow exceptions. He believed the county's conduct was likely unconstitutional. Three other justices signaled they may agree that strong protections for homeowners are needed when these cases return to lower courts.

Can the Government Take Your Home?

The Supreme Court deliberately left the biggest question unanswered: what does "fairly conducted" actually mean? Must the government try to collect the debt another way first? Must the auction be designed to attract bidders and get the best price? Must notice to the homeowner be genuinely effective?

Those questions now go back to lower courts with almost no guidance. In the Pung case, a $2,242 debt led to the loss of a home worth nearly $200,000. Eighteen months after the sale, the new owner resold it for $195,000, almost exactly what it had been assessed for. That $118,000 difference represents a real financial loss to the Pung family.

The Constitution allows the government to keep that difference, but only if the process was fair. What counts as fair is still being decided. If lower courts adopt Justice Thomas's framework, which requires governments to exhaust other collection methods before seizing homes, tax sale practices in many states could face serious legal challenges. For now, homeowners facing tax foreclosure should know that the Supreme Court has given them less protection than they might have expected, but the fight over what "fair" means is far from over.