Michigan Family Lost a $194K Home Over a $1.6K Tax Bill—Now the Supreme Court Is Weighing In

Scott Pung did everything right. He bought a three-bedroom home in Union Township, MI, for his family, paid his bills, and followed the rules to receive a property tax exemption for a small supplemental school tax.

When Scott died in 2004, the home passed to his family. Under Michigan law, the school tax exemption was supposed to continue as long as a family member—like Scott’s son, Marc—kept living in the house.

But years later, the local tax assessor said the family no longer qualified, even though Marc had moved in with his family. The office retroactively denied the exemption, declared the Pungs delinquent on roughly $1,600 in school taxes, and tacked on interest and penalties until the bill climbed to about $2,200.

For homeowners across the country, property tax delinquency like the one the Pungs faced can cost far more than late fees or hit to a credit score. In many places, it can cost them every dollar of equity they’ve built in their home, as counties can seize a property, sell it at a deep-discount auction, and keep the proceeds after the debt is paid.

That’s what happened to the Pungs. Even though the county later conceded the home was worth about $194,400, it confiscated the property to recover the disputed school tax and sold it at auction for just $76,000—then kept all of the money and evicted Marc and his family.

In 2023, the U.S. Supreme Court ruled that kind of windfall is unconstitutional. “A taxpayer must render unto Caesar what is Caesar’s, but no more,” Chief Justice John Roberts wrote in the court’s unanimous decision in Tyler v. Hennepin County.

Because of Tyler, the lower courts ordered the county to pay the Pungs the “surplus proceeds” from that fire-sale auction—about $73,000 (the auction price minus the $2,242 tax debt). That’s far less than the roughly $194,400 minus the tax bill they would likely have received if their home had been sold for its fair market value.

It’s that gap—the difference between what a home would sell for in a normal market and what’s left after a bargain-basement tax auction—that the Supreme Court will now confront in the Pungs’ case, and what the justices rule could decide the future legality of home equity theft for homeowners across the country.

Tyler promised fairness. Why are homeowners still losing equity?

The Pungs’ ordeal isn’t just about one Michigan family. It’s about how, in many places, the price set at a rushed tax auction effectively becomes the measure of justice—no matter how far that number is from what a home is actually worth.

Pacific Legal Foundation, the firm co-representing the Pungs, hasn’t tallied up the total impact nationwide.

“We have not conducted a study,” Christina Martin, senior attorney at PLF, notes. But states like Michigan have tracked the pipeline of properties and the “extra” money those sales generate.

A cursory scan of the most recent tax auctions in Michigan shows an alarming discrepancy between the sold price at auction and the estimated market value of such homes by automated valuation models (AVMs). While not perfect measures of market value and not a true substitute for an appraisal by a certified appraiser, they provide a useful benchmark of what a property should ballpark for.

However, the tax auction records and AVM estimations of these homes are nowhere in the same ballpark, or even universe. The first five properties alone show discrepancies between $50,000 and $100,000—far outside of what you might expect between an AVM and true market value.

The problem, Martin argues, is built into the way many counties run these sales. Auction prices are often artificially low—homes are grouped into bulk sales, marketed poorly, or offered at odd times to a narrow pool of bidders. When that deep discount becomes the benchmark for compensation, it’s the homeowner who absorbs the loss.

“If the government has the privilege to sell homes to collect property taxes, it should take care to act fairly and reasonably when it sells those properties,”  she says.

In 2025, that kind of care isn’t hard to imagine.

“It has never been easier to advertise real estate with apps ... yet many counties still don't bother, because they don't care about whether they get a just price for the property,” Martin says. 

Some states are already doing more. “For example, in Maine, the government is supposed to hire [agents] and sell property for the appraised value,” she says.

What the Supreme Court could decide in Pung—and why it matters nationwide

The Supreme Court’s decision in Pung will help determine which model prevails: a system where bargain-basement auction prices dictate how much equity families deserve, or one where governments are pushed toward selling tax-foreclosed homes in a way that reflects their true market value.

“For years before Tyler, Michigan became accustomed to filling budget gaps by confiscating excess home equity, and it has since resisted effective, meaningful reform,” says Martin. “We hope this case will complete the fairness Tyler promised.”

Depending on how the justices answer that question, the ruling could reshape tax foreclosure systems in states that still use the auction system, including New York, where a homeowner recently lost his home because of a missed $600 water bill.

In one path, the court could require governments to base compensation on true market value, not just auction proceeds. That would push counties and states that haven't already done so to rethink how they sell tax-foreclosed homes, how they advertise them, and how they calculate what they owe families who lost property.

On the other, the court could effectively bless an auction-based model, where governments can fulfill their obligations by returning only the surplus from a tax sale—even if their own practices helped drive the price far below what the home was actually worth.

Either way, a decision in Pung v. Isabella County will send an important signal. As home equity grows and tax burdens rise in lockstep, it may decide who is able to hang on to their equity in the event they can't keep up with their bills.

The stakes: Untold amounts of equity and generational wealth on the line

No one has pinned down a precise national total for how much equity is still being lost under auction-based tax foreclosure systems. But a look at Michigan’s offers a glimpse at a much larger story.

Year after year, properties move through the tax foreclosure pipeline, get sold off, and generate “surplus” proceeds—money that, under Tyler, belongs to the former owners, not the government. Layer that pattern across the states that relied heavily on similar systems, and the potential losses skyrocket.

For many families, that equity is their greatest asset and the only real wealth they have. This is especially true for those who are most likely to lose homes this way, according to Martin—elderly homeowners and those juggling medical crises or caregiving. 

When a tax foreclosure auction wipes out their stake in a house, it erases a safety net and severs a link in the chain of generational wealth that might have helped children or grandchildren buy their own homes, pay for school, or weather a future emergency. After all, children of homeowners are seven to eight percentage points more likely to become homeowners themselves than children of renters, according to research from the Urban Institute.

That’s why advocates say this isn’t just about cleaning up a technical glitch in state tax codes. It’s about drawing a line around how far the government can go when it’s collecting what it’s owed. 

In Martin's words, “The bottom line is this: Even if you think tax foreclosures and tax sales of homes are justified to collect tax debts, they should not happen over debts that represent a tiny fraction of a home's value."