Property Rights, Tax Foreclosures, and the Ongoing Impact of Tyler v. Hennepin County

Originally published in the REALTOR® Association of the Fox Valley newsletter under the title “Rendering Unto Caesar What Is Owed, Not Your Home Equity.” Republished here as part of Neeley Erickson’s Policy Commentary series.

Homeownership has long been viewed as one of the primary ways American families build wealth. That is why developments around property tax foreclosures, both nationally and here in Illinois, deserve close attention.

In 2023, the U.S. Supreme Court unanimously decided Tyler v. Hennepin County, holding that when a government sells a property to satisfy unpaid property taxes, it may take only what it is owed. Any remaining value, the homeowner’s equity, belongs to the property owner. Retaining that surplus violates the Fifth Amendment’s Takings Clause. The Court made clear that falling behind on property taxes does not erase constitutional property rights.

At the time of the Tyler decision, Illinois was one of 13 states identified as needing to revisit its property tax foreclosure laws to ensure compliance. Since then, several states have taken legislative action, while others believed their existing systems already aligned with the ruling. Ongoing litigation across the country continues to clarify how Tyler applies in practice. Illinois remains among the states where reform has not yet occurred and where courts are now playing a significant role in shaping the outcome.

That legal pressure became especially clear on December 10, 2025, when a federal judge ruled in a class action lawsuit that Cook County property tax foreclosure class action found aspects of Cook County’s tax sale system violated constitutional protections. The court determined that homeowners lost not only their property but also their accumulated equity without just compensation, falling short of the standards outlined in Tyler. Reporting on the case indicates that more than a thousand homeowners, including seniors, lost properties worth millions of dollars, often over relatively small tax debts. Litigation remains ongoing to determine liability and potential compensation.

One example cited in the litigation involves Goyce Rates, who inherited an Evanston home in 2014 but failed to pay property taxes on two parcels on which the home sits. In 2019, the tax liens were sold for a total of $9,025.45 in unpaid taxes, despite the home being valued at approximately $389,000.

Cook County is not alone. Similar lawsuits have been filed against at least eight other Illinois counties, with homeowners alleging the loss of home equity through the tax sale process. Several counties have raised concerns with the state that the lack of legislative reform following Tyler has left them exposed to litigation, reinforcing that this is a statewide issue rather than a single county problem.

As these cases unfold, they influence how homeowners understand risk, equity, and the long-term security of homeownership. From a market perspective, clarity matters. Systems that allow homeowners to lose substantial equity over relatively small tax debts raise questions about fairness, predictability, and consumer confidence, all of which affect housing markets more broadly.

At the national level, the National Association of REALTORS® has played an important role in defending property rights as courts interpret Tyler. After filing a successful amicus brief in that case, NAR has remained engaged in subsequent litigation. One of the most closely watched cases is Pung v. Isabella County in Michigan, which asks whether homeowners are entitled to compensation based on the fair market value of their property rather than a depressed tax sale price. The case reflects a broader legal debate over how courts should measure the value of equity lost through tax foreclosure.

Together, these developments show that courts are actively shaping how property tax foreclosure systems interact with constitutional protections. As litigation continues and states evaluate potential reforms, homeowners, heirs, policymakers, and communities are paying closer attention to how tax foreclosure systems operate and how property rights are protected.

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Strong housing policy begins with clear data, thoughtful collaboration, and a shared commitment to expanding opportunity for every community.

—Neeley Erickson

Neeley Erickson is a Government Affairs Director specializing in housing policy, local governance, and community development across Illinois. Her work focuses on advancing practical solutions that expand housing opportunity and strengthen communities.