The U.S. Supreme Court ruled 9-0 against a Michigan family that argued Isabella County committed a constitutional violation by seizing and selling their home over a roughly $2,200 tax bill, then keeping the difference between the auction price and the property's full market value. The unanimous decision, authored by Justice Samuel Alito, held that local governments are not required to compensate former homeowners based on a property's hypothetical fair market value when a tax foreclosure sale brings in less.

The case, Pung v. Isabella County, capped what Fox News Digital described as a decade-long legal battle between the Pung family and the central Michigan county. At its center was a 3,000-square-foot home valued at $194,400 that the county foreclosed on to collect $2,241.93 in unpaid property taxes. Isabella County then sold the property at public auction for $76,008, less than half its stated value, and returned the surplus auction proceeds to the Pung estate.

The family argued that gap amounted to the destruction of more than $118,000 in home equity. The court disagreed.

What the justices said

Justice Alito, writing for the full court, grounded the ruling in the long history of tax sales in the United States. He wrote that "the proper baseline under the Takings Clause is the price obtained in a tax sale, at least when the sale is fairly conducted in light of our country's history of tax sales." He added plainly:

"Neither the Fifth nor the Eighth Amendment requires the government to compensate former owners based on the hypothetical fair market value of their property."

Alito then turned to the practical consequences of the Pung family's legal theory. If governments had to make up the difference between auction proceeds and full market value, the math could turn upside down fast. As he put it in the opinion:

"Under Pung's rule, a tax sale to collect $20,000 in delinquent taxes would net the government a $20,000 loss, a loss paid out to the delinquent taxpayer himself. The possibility of such a perverse result would render tax sales infeasible as a debt-collection mechanism."

That logic carried the day. All nine justices agreed on the bottom line. But the ruling was not without internal tension.

Thomas and Gorsuch break from the pack

Justice Clarence Thomas, joined by Justice Neil Gorsuch, wrote a separate opinion that stopped short of celebrating the outcome. Thomas acknowledged the legal conclusion but refused to let the county off the moral hook. His words were blunt:

"What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional."

That concurrence matters. Thomas and Gorsuch signaled that the constitutional question may not be fully settled, particularly in cases where local governments push foreclosure processes to the edge. The majority chose not to resolve the Pung family's procedural claims about whether the seizure and sale were conducted fairly. Instead, the court vacated the lower court ruling and sent the case back to the U.S. Court of Appeals for the Sixth Circuit to take another look at those claims.

So while the family lost the headline fight, fair market value as the constitutional floor, the door remains open on narrower procedural grounds.

The backstory: a tax bill that spiraled

The dispute traces back to a revoked Principal Residence Exemption on the Pung family's property in Isabella County. That revocation generated a tax bill of $2,241.93. The family contested the bill. Isabella County's attorney, Matthew T. Nelson of Warner Norcross + Judd LLP, told Fox News Digital that Michael Pung, the personal representative of the family estate, "refused to pay the property tax due after litigating the matter through the entirety of the Michigan court system."

Nelson also said Pung repeatedly declined to submit paperwork to maintain the tax exemption, did not appeal the assessment, and ignored years of notices. After the federal lawsuit was filed, Nelson added, Pung "never challenged the adequacy of the auction procedures for the simple reason that the auction was conducted in a manner consistent with the law."

National Review reported earlier that the case originated with Union Township tax assessor Patricia DePriest, whose actions the Pacific Legal Foundation characterized as overreach. PLF attorney Deborah J. La Fetra wrote that "DePriest's personal interpretations of the law led to a home valued at $200,000 being seized and sold over a $2,200 tax bill (including interest and fees) that never should have been levied in the first place."

That framing, a modest tax dispute ballooning into the loss of a family home, is what made the case resonate with property-rights advocates across the political spectrum.

The county's defense

Isabella County did not back down. Nelson praised the ruling in a statement shared with Fox News Digital:

"We are grateful the U.S. Supreme Court rejected Pung's challenge to the constitutionality of the process governments have relied on for centuries to collect property taxes that remain unpaid for years. Isabella County and other counties throughout the state of Michigan regularly make herculean efforts to help homeowners avoid foreclosure. But at the end of the day, foreclosure is a tool that needs to remain in their toolboxes."

Ten other states and the District of Columbia filed in support of Isabella County's position, arguing that requiring fair-market-value compensation would upend the tax-collection systems they have relied on for generations. The specific states were not named in the record.

The county's legal position rested heavily on the Supreme Court's 2023 precedent in Tyler v. Hennepin County, which held that local governments cannot pocket more than the amount of unpaid taxes in a foreclosure sale. Isabella County argued, and the court agreed, that returning the surplus auction proceeds satisfied that requirement. As the Washington Examiner reported, the Pung family's lawyers had argued they were owed roughly $192,000 in surplus based on fair market value, rather than the approximately $73,000 surplus from the auction price.

The gap between those two numbers, roughly $119,000, was the heart of the constitutional question the court resolved against the family.

What comes next

Larry Salzman, the Pacific Legal Foundation attorney who represented the Pung estate, expressed disappointment but noted the fight continues. He told Fox News Digital:

"It's disappointing because we believe that, at least in some cases, fair market value is demanded by the Constitution, and we're happy to see that at least Justice Thomas and Gorsuch agree on that point, but it's satisfying that we get to continue fighting the case for another day, that the case is no longer final and that the Pungs have an opportunity to remedy the harms that were done to them."

The remand to the Sixth Circuit means the procedural questions, whether Isabella County's seizure and sale process was itself fair, will get a fresh hearing. The Supreme Court explicitly declined to weigh in on those claims, stating it would not "resolve any of Pung's newfound contentions that the procedure the County followed in seizing and selling his property was unfair."

As the Associated Press noted, Alito wrote that "the traditional rule, under which the taxpayer receives only the difference between the auction sale price and unpaid taxes, is just." Salzman, for his part, framed it differently: "The case isn't over. The Pungs won the right to continue their fight in the lower courts."

The ruling carries implications well beyond Isabella County. Across the country, local governments use tax foreclosure auctions as their primary tool to collect delinquent property taxes. A ruling requiring fair-market-value compensation would have forced counties to either absorb massive losses on every sale or abandon the mechanism entirely. Eleven jurisdictions told the court as much.

The question of how far government authority extends over private property, and what process is owed before a family loses a home, is one the courts continue to wrestle with. In a different arena, recent federal actions revoking legal status from family members tied to foreign regime connections have raised parallel questions about the scope of government power over individuals' rights and property.

The real cost

Step back from the legal doctrine and the numbers tell a stark story. A family owed $2,241.93 in disputed taxes. The county took a home worth $194,400. It sold for $76,008. The surplus went back to the estate. And the Supreme Court said that is constitutional, at least when the sale is conducted fairly.

Whether this particular sale was conducted fairly is a question the Sixth Circuit will now have to answer. Nelson, the county attorney, expressed confidence: "We have no doubt the Sixth Circuit will reach the same conclusion."

Thomas and Gorsuch were less sure. Their separate opinion acknowledged the legal framework but refused to pretend the outcome was just. "What Isabella County did to the Pungs was wrong," Thomas wrote, a line that will outlast the ruling itself in the property-rights debate.

For homeowners across the country, the message from Tuesday's ruling is clear enough: if your local government forecloses on your home and sells it at auction, the Constitution does not guarantee you will get what it was worth. You will get what the auction brought in, minus what you owed. The rest is gone.

When a $2,200 tax bill can cost a family more than $118,000 in equity and nine justices call it constitutional, the system may be legal. Whether it is just is another question, one even the justices who voted for it could not bring themselves to answer with a straight face.