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Alabama Law for You

  • Writer's pictureGregory Stanley

Tyler v. Hennepin County

Updated: Apr 11

(Pacific Legal Foundation seeking donations for their crusade)


If you want to know about Tyler v. Hennepin County just go here:  Alabama Laws are arcane and complex.  Our laws change almost every year and there are no other states that have the same laws as Alabama.  Our Constitution is the longest in the world.  Literally.  A company called Pacific Legal Foundation seems to believe they understand Alabama law better than Alabama Courts and they are seeking donations for a crusade that seems to be based on Tyler.  The following is a brief brief on Tyler v. Hennepin County.  See the Pacific Legal website here:

The Issue:  Who owns the overbid after a foreclosure auction. 

The Facts: The Facts that matter are these: Geraldine Tyler didn’t pay her property taxes and Hennepin County, Minnesota foreclosed on Geraldine Tyler’s property and auctioned off the property based on the property tax debt. (In Alabama we auction off a lien, not the property.)  Tyler owed $15,000 and there was a $25k overbid at the auction.  Inexplicably, the County thought they could keep Tytler’s $25k overbid.  (Overbid is any amount paid at auction in excess of the debt owed.) This County, a government agency, attempted to use its power to take the personal property (excess bid money) from the citizen in violation of the Takings Clause of the US Constitution that prohibits private property from being taken for public use without just compensation.

The Law: Across America, real property foreclosures and personal property repossession and sale ensures equity in the property belongs to the debtor.  That means the excess proceeds ($) of the sale of the real or personal property, after debts are paid, goes back to the debtor: It’s their equity after all.  Upon a foreclosure or repossession and sale with an overbid (more was bid at auction than was owed) the law requires the foreclosing entity to file an “interpleader” lawsuit and deposit the excess money with a court of equity in the county, or if there are no mortgages or other possible encumbrances, the foreclosing entity can refund the money directly to the former owner.  It would be inequitable for the foreclosing entity to get such a windfall. Further, as a public policy matter such a windfall would encourage predatory foreclosures.   If the former owner later redeems real or personal property after a repossession/foreclosure sale, they must return the excess bid they received in addition to the actual debt. The law prevents the equity from being taken from the debtor—only the amount of the debt may be claimed by the lender.Further, a governmental taking must meet the requirements of the Takings Clause and the County would have to show 1. Public use/necessity; and 2. Just compensation.

Here: Hennepin County foreclosed on Tyler’s real property that had a debt of $15k.  The county sold the property for $40k and refused to interplead or return the overbid.  Tyler sued for the overbid (her equity). The County did not make an argument regarding 1. Public use and, 2. Could not show just compensation.  It was argued the $25k could be considered a fine to deter other delinquent taxpayers.  The $25k was not filed into court as an interpleader or refunded to the owner; the foreclosing county argued the windfall was theirs for foreclosing: A completely unsupportable and spurious theory. Because this was a government agency, the law requires any taking be for public use, and the citizen must be justly compensated. 

Conclusion: The Supreme Court relied on the Takings Clause in its ruling against the County and did not have to address the idea that a $25k fine on a $15k debt would be excessive. Hennepin County lost, and Tyler received her equity in the form of proceeds from the sale.

Dicta: “The principle that a government may not take more from a taxpayer than she owes can trace its origins at least as far back as Runnymeade in 1215, where King John swore in the Magna Carta…”

(205) 451-4196

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