Tax Lien Foreclosures in Alabama are Securely Within Constitutional Law After Pung v. Isabella County (2026)

In Pung v. Isabella County (June 23, 2026), the United States Supreme Court clarified a foundational rule governing tax‑sale takings: “just compensation” is measured by the actual auction sale price—not the property’s hypothetical fair market value—so long as the tax sale is fairly conducted in light of the Nation’s historical tax‑sale practices.

The Court emphasized that for centuries, governments have used tax foreclosure and public auction as a lawful method of collecting delinquent taxes, with the only constitutional requirement being the return of surplus proceeds.

The Court stated that the owner is entitled to “the surplus sale proceeds—nothing less, and nothing more,” and rejected any theory requiring governments to pay fair‑market‑value windfalls.

Directly Supports Alabama Foreclosures

Alabama’s Article 7 tax lien certificate system already aligns perfectly with the constitutional framework reaffirmed in Pung. Under Alabama law:

• Any person with an ownership interest may request a public auction under Ala. Code § 40‑10‑197(c)(2).

• The auction is conducted publicly, competitively, and with statutory notice requirements.

• The certificate holder receives the amount owed; the owner receives all surplus proceeds.

• The foreclosure and quiet‑title process is judicial, transparent, and historically consistent with tax‑sale practice nationwide.

Because Alabama’s system allows the owner to trigger a public auction, the sale price is—by definition—“fairly conducted” under the standard articulated in Pung. The Supreme Court expressly held that when a tax sale is fairly conducted, the auction price is the constitutional measure of compensation.

This places Alabama’s Article 7 system squarely within the Fifth Amendment’s requirements.

The Eighth Amendment Argument Is Also Settled

The Court also rejected the claim that returning only surplus proceeds constitutes an “excessive fine.” The Excessive Fines Clause does not require fair‑market‑value compensation, and the Court found no historical or precedential basis for treating a properly conducted tax sale as punitive.

This further confirms that Alabama’s judicial foreclosure process—focused solely on debt collection and surplus return—does not implicate the Eighth Amendment.

Alabama's Secure, Constitutionally Grounded Framework

The Supreme Court’s decision in Pung v. Isabella County confirms that tax foreclosure systems remain constitutionally sound when they rely on public auction as the mechanism for determining value and distributing proceeds. The Court reaffirmed that the auction price—not an imagined fair market value—is the lawful measure of compensation so long as the sale is conducted fairly and in keeping with the Nation’s long history of tax‑sale practice. Alabama’s Article 7 tax lien certificate system fits squarely within this framework.

Because Alabama allows any owner or person with an ownership interest to request a public auction, the process inherently satisfies the fairness requirement emphasized in Pung. The judicial foreclosure procedure, the return of surplus proceeds, and the opportunity for an owner to trigger a competitive sale all align with the constitutional principles the Court described. As a result, Alabama’s system operates on firm constitutional ground, preserving both the government’s ability to collect delinquent taxes and the owner’s right to a transparent, historically rooted method of valuation and surplus recovery.

Gregory Stanley is a Land Lawyer in Alabama

Gregory@Stanley-Law.Com