Pung v. Isabella County, Michigan
Facts: A homeowner defaults on property taxes which are a lien on their property. After receiving proper notices to pay, the homeowner does not cure the default and the county forecloses on the lien, selling the property at auction. The property sells for less than its current fair market value (FMV), but for an amount more than the property tax lien. The county disburses the excess sales proceeds to the homeowner.
Claim: The homeowner claims they are entitled to the difference between the tax debt and the property’s current FMV since the auction price does not reflect the value of the property sold.
Counterclaim: The county claims the homeowner is not entitled to the difference between the tax debt and the current FMV since the homeowner did not pay the tax debt by sale or otherwise and waited for the auction sale to provide funds to pay the tax debt.
Holding: The U.S. Supreme Court holds the homeowner is only entitled to the difference between the tax debt and the auction price since the homeowner had the opportunity to sell the property themselves at its FMV to pay the tax debt before the county foreclosed on its tax lien. [Pung v. Isabella County, Michigan (2026) 609 U.S. ___]
Pung v. Isabella County, Michigan
Editor’s note — While the case opinion decided a homeowner’s compensation after a tax sale is based on the auction amount received at the sale and not the fair market value, the court sent the case back to the lower court to resolve a separate issue concerning the tax debt that formed the basis for the foreclosure as invalid and the foreclosure of the home was an invalid taking. [Pung v. Isabella County, Michigan (2026) 609 U.S. ___]
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