Tax sale compensation
Pung v. Isabella County
In brief
The Supreme Court wiped out the lower-court ruling and sent the case back (vacated and remanded), so the estate's final payment and the ultimate outcome remain open.
- Where it stands
- Decided
Decided 9-0 · June 23, 2026 · Opinion by Justice Thomas
- What it’s about
- The Court unanimously vacated and remanded, holding that after a fairly conducted tax-foreclosure sale, the Fifth Amendment measures just compensation by the auction sale price rather than the property’s estimated open-market value.
- Who it affects
- The Court's opinion says the auction sale price, not a hypothetical market value, is the starting point for calculating compensation when a tax sale is fairly conducted.
Summary: written with AI from the case record.
What it's about
It also rejected the estate’s claim that paying only the auction surplus, rather than the property’s estimated market value, violated the Eighth Amendment’s Excessive Fines Clause.
It tests how constitutional rules for property takings and excessive fines apply when local governments sell homes to collect tax debt.
Question presented
1. When the government takes property for tax debt, does the Fifth Amendment require compensation based on the property’s true fair market value, or only on the lower amount it sold for at a tax foreclosure auction? 2. Does the Eighth Amendment’s Excessive Fines Clause prohibit the government from seizing and keeping a property worth far more than the small tax debt owed on it?
What the Court decided
Holding
1. The proper baseline for measuring “just compensation” following a tax sale is the auction sale price, not the property’s hypothetical fair market value, at least when the sale is fairly conducted in light of the country’s history of tax sales. 2. The Court rejects Pung’s argument that the County violated the Eighth Amendment Excessive Fines Clause by failing to compensate him for his property’s fair market value. Forfeiture of property can be a “fin[e]” for purposes of the Eighth Amendment if it serves “in part to punish.” Austin v. United States, 509 U. S. 602, 610. Pung lacks precedent or historical evidence suggesting that a tax sale which is fairly conducted in light of our Nation’s history would violate the Eighth Amendment. In addition, imposing Pung’s fair-market-value rule under the Eighth Amendment would entail the same drastic consequences as imposing the rule under the Fifth Amendment. Vacated and remanded.
- Result
- Vacated
The vote
What's next
The Sixth Circuit will continue the case under the Supreme Court's guidance and can consider whether the auction was fairly conducted, if that issue is properly before it. The estate's final compensation remains unsettled.
Why it matters
It rejects Pung's Eighth Amendment argument that the County had to pay market value, while the lower court can still consider whether this auction met the fairness standard, if that issue is properly before it.
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More questions
- What happened in Pung v. Isabella County?
- The Supreme Court wiped out the Sixth Circuit's ruling and sent the case back (vacated and remanded). It did not finally decide who wins.
- What did the Court say about the home's value in Pung?
- The opinion says the auction sale price, rather than estimated market value, starts compensation when the sale is fairly conducted. It rejected Pung's Eighth Amendment market-value argument.
- What remains unresolved after Pung v. Isabella County?
- The fairness of this auction remains for the lower court to examine, if that issue is properly before it. The estate's final compensation remains unsettled.
- What happens next in Pung v. Isabella County?
- The case returns to the Sixth Circuit for further proceedings. That court can apply the Supreme Court's guidance and examine the auction's fairness if the issue is properly before it.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.