Minnesota
How It Works
Minnesota counties impose tax liens on delinquent properties. The county auditor forecloses liens after a three-year redemption period, granting title to the state. The government then decides whether to keep or sell the property and disburses all profits from any sales to government entities.
The Impact
Homeowners caught up in this process lose, on average, 90% of their equity. For the 1,300 homes in our dataset, homeowners lost a total of $100 million.
Why It Matters
In Minnesota:
- 70% of homes were forcibly seized for tax debts less than the price of a 10-year-old Chevy Silverado.
- On average, homeowners were forced to pay and penalized for 20 times more than the tax debt owed.
- Governments sold these homes for a fraction of their value but still pocketed $11 million more than the debt owed.
In 2010, Geraldine Tyler was an elderly widow living alone in a one-bedroom Minneapolis condo that she owned. Crime was rising in her neighborhood, and one day, she became a target. After a young man harassed and frightened her, she decided to rent a new place in a safer area.
Unfortunately, the rent on her new apartment strained her budget. Geraldine fell hopelessly behind on her condo’s property tax bills, racking up $15,000 in taxes owed and fees.
To collect the $15,000 debt, Hennepin County seized her condo, valued at $93,000. Since government entities typically do not have the internal staff to market tax-foreclosed properties or the same incentives as most sellers have to hire a realtor to secure a competitive sale price, the home sold below its market value for just $40,000.
Ultimately, Hennepin County did not return the difference—$78,000 in home equity (or even the balance of the $40,000 sale price over the tax owed)—to Geraldine.
Government has the power to collect unpaid taxes from homeowners by seizing and selling their homes. However, it is not entitled to keep all the proceeds from tax sales—it can only keep what it was owed. While it can penalize homeowners for late or unpaid taxes, the Eighth Amendment of the Constitution prohibits excessive fines.
Geraldine is suing Hennepin County and its treasurer for stealing her home equity—the savings she built in her Minneapolis condo. She is fighting not just for herself; her class-action lawsuit argues that the government has violated the Fifth and Eighth Amendments and the Minnesota Constitution by taking property without providing compensation.
Property rights encompass more than just physical land and structures. When someone owns a home, they also have a right to their home equity—the property’s underlying value after accounting for all debts.
Geraldine is fighting for the hundreds of Minnesota homeowners ensnared by an unjust system. From 2014 through 2021, local governments seized and sold at least 1,350 Minnesota homes in the 12 counties that we studied. Residents lost their homes, along with all the equity they had built up. The lost savings amounted to an average of $155,000 per home, or 90% of the home’s value.
In 2022, the Eighth Circuit upheld a Minnesota federal trial court, which dismissed Geraldine’s claims.1 The trial court concluded that because Minnesota’s tax statute strips tax-delinquent homeowners of their property rights, home equity theft victims have no property interests to stake their claims on. In essence, the court said that the legislature may destroy property rights without just compensation by redefining these rights.
In other words, the court upheld a law that defies the U.S. and Minnesota Constitutions. However, the legislature does not have the authority to override constitutional rights.
To defend Minnesota homeowners’ constitutional rights, Pacific Legal Foundation took on Geraldine’s appeal. PLF is prepared to seek a review by the United States Supreme Court on the issue. If the Supreme Court is unwilling to take this case, PLF will pursue other cases and petition the Minnesota Legislature to change its regressive and confiscatory statute that takes property from its most vulnerable citizens.
The U.S. and Minnesota Constitutions protect homeowners’ rights to just compensation for seized property and freedom from excessive fines. These laws require Hennepin County to return to Geraldine the difference between what she owed and what it took. Geraldine has a right to the savings in her condo. The state of Minnesota stole those savings from her.
Minnesota must end home equity theft now, but Minnesotans should not have to wait for the courts to vindicate Geraldine’s rights and the rights of her fellow homeowners. The Minnesota Legislature can act now to restore homeowners’ property rights by following other states’ models and allowing homeowners to reclaim their equity after tax foreclosure.
Resources
End Home Equity Theft Model Policy
Pending litigation
Looking Up: Ending Home Equity Theft in the North Star State
State Summaries
Neighborhood Impacts
Download data
Legal Appendix
Minnesota Home Equity Theft Laws
Does the law commonly protect owners’ equity?
- Analysis
-
No. In Minnesota, tax-delinquent lands are transferred to the state to be held in trust for the county in which they sit. At the expiration of redemption, the county board of supervisors votes on what to do with the property. There are several options available, but none protects the former owner’s equity.
- Citation
-
Minn. Stat. §§ 280.001, 280.01, 280.43, 281.25, 282.01, 282.05, 282.08.
Are there any exceptions to that rule?
- Analysis
- Yes. After the expiration of the redemption period but before the property is otherwise sold or leased, the former owner may apply to the county board of supervisors to repurchase the property for the amount of delinquent taxes plus penalties, interest, and costs. If the property is not a homestead, the period for repurchase is limited to six months after the expiration of redemption. The county board is not obligated to grant an application for repurchase, however, and may only do so after adopting a resolution that permits repurchase to avoid undue hardship or injustice to the former owner. Nevertheless, its discretion is limited, and it may not deny the application on an arbitrary or capricious basis.
- Citation
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Minn. Stat. § 282.241(1); see Radke v. St. Louis Cnty. Bd., 558 N.W.2d 282, 284−85 (Minn. Ct. App. 1997).
Does the government sell tax liens, or does it sell property outright, and what procedures does it use for the sale?
- Analysis
-
Technically, properties are purchased by the state at an initial tax sale and are held in trust for the county, subject to the right of redemption. In effect, this is essentially the automatic transfer of title from the county to the state. Upon the expiration of redemption, the county votes on whether to sell the land or keep it for public use. If designated for sale, the county must conduct an appraisal and sell the property at public sale to the highest bidder, with the minimum bid equal to the appraised value.
- Citation
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Minn. Stat. §§ 280.01, 281.25, 282.01(4), (7)
What interest and penalties accrue for delinquent taxes, and who collects them?
- Analysis
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Interest on delinquent taxes is equal to the average prime interest rate charged by banks between April and September of each year but cannot be lower than 10% or higher than 14%.
- Citation
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Minn. Stat. §§ 279.03(1)(a), 270C.40(5).
What is the redemption period—the length of time to pay the debt prior to permanently losing title?
- Analysis
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Homeowners may redeem property within three years from the date it was transferred to the state. No earlier than 120 days before the expiration of this period, the government must serve notice to the owner of the impending expiration. If this notice is served later than 60 days before the expiration of three years, then redemption remains available until 60 days after the date that the notice was served.
- Citation
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Minn. Stat. §§ 281.17, 281.23.
If equity is stolen, who profits?
- Analysis
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After foreclosure, the county votes on whether to keep the property for public use or sell it for its appraised value. In either case, the government retains equity.
- Citation
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Minn. Stat. §§ 282.01, 282.05, 282.08.
How much time does the previous owner have to claim the surplus proceeds, and what are the procedures for claiming them?
- Analysis
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N/A
- Citation
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N/A
What types of foreclosures are used in the state?
- Analysis
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Administrative.
- Citation
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Minn. Stat. § 281.23(9).
What types of notice does the state require?
- Analysis
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(1) Notice of tax delinquency, and (2) notice of the expiration of redemption.
- Citation
-
Minn. Stat. §§ 279.05, 279.09, 279.091, 281.23(1).
1 Tyler v. Hennepin Cnty., 26 F.4th 789, 790 (8th Cir. 2022).