A Michigan family lost a home valued at nearly $200,000 over a disputed tax bill of just $2,241.93, a case that eventually reached the United States Supreme Court.
The story begins with Timothy ‘Scott’ Pung, who purchased a three-bedroom house in Isabella County, Michigan, 35 years ago. According to the Pacific Legal Foundation, which represents the family, the house gave them exactly what most people hope for when they buy a house: stability, memories, and something to pass on to the next generation. After Timothy passed away in 2004 and his wife passed away in 2008, their son Marc continued living in the home with his wife and young child.
Trouble began when the county decided the family no longer qualified for Michigan’s Principal Residence Exemption, a tax break available to qualifying primary residences. The Pung family challenged the decision before the Michigan Tax Tribunal and won. The tribunal ruled that because family members and beneficiaries of the estate continued living in the house, they did not have to file additional paperwork to keep the exemption.
That ruling was apparently disregarded. Court filings show that after the assessor was reminded about the earlier ruling, he responded, “I don’t care what he says, the law says that you do.” The county continued treating the property as delinquent over taxes the family argued they never should have owed. While the dispute dragged on, foreclosure proceedings moved forward.
The county eventually seized and auctioned the property, selling it for $76,000, roughly 40 percent of its $200,000 assessed value. Marc, his wife, and their child were evicted. Approximately 18 months after the auction, the new owner resold the home for around $195,000, the same figure it had been assessed for when the tax dispute first arose.
Following the Supreme Court’s 2023 ruling in Tyler v. Hennepin County, which established that the government cannot use a tax debt to take more property than it is owed, the county returned the surplus from the auction to the Pung family, approximately $73,766 after subtracting the tax debt. The family argued this was insufficient, contending they deserved compensation based on what the home was actually worth, not what a foreclosure auction produced.
The Supreme Court, in a unanimous decision, ruled that if a tax auction is conducted fairly, the government is not required to pay the former owner fair market value. However, the court did not rule on whether Isabella County’s specific auction met that standard. That question now returns to lower courts.
Justice Clarence Thomas, while concurring, noted that the county had already lost the earlier exemption ruling and pressed ahead regardless, writing, “What Isabella County did to Pungs was wrong and on my initial view likely unconstitutional.”
The Pung family’s legal battle is not over. The next stage will determine whether the foreclosure and auction process were handled fairly, a question the Supreme Court deliberately left open.
