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Michigan family fights county over tax foreclosure equity loss

Source: mlive.com

TL;DR

Pung family lost their Isabella County home to foreclosure over a $2,242 tax debt a judge ruled they never owed.
Home valued at $194,400 sold at auction for $76,008, costing them over $118,000 in equity.
U.S. Supreme Court heard arguments on whether governments must pay fair market value in such tax sales.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

The story at a glance

The Pung family inherited a three-bedroom home in Union Township, Isabella County, bought by Scott Pung in 1991; a tax credit was revoked in 2010 but reinstated by a judge in 2012, meaning they owed nothing. The county still foreclosed in 2015 and auctioned the home for $76,008 in 2019, despite its $194,400 value. The U.S. Supreme Court heard arguments in February 2026 in Pung v. Isabella County on whether the Fifth Amendment requires fair market value compensation in tax foreclosure sales.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

Key points

Union Township revoked the Pungs' primary residence tax credit in March 2010 for missing paperwork; a tax tribunal ruled in 2012 to reinstate it, and Michigan Court of Appeals confirmed just before 2015 foreclosure.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
Home had recent upgrades like new cabinets, granite countertops, and fresh flooring; auction buyer resold it soon after for $195,000.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
County returned surplus proceeds after the $2,242 debt (local tax plus penalties and interest), but Pungs argue this erased their equity without just compensation under the Fifth Amendment.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
Pacific Legal Foundation represents the Pungs; Isabella County, via lawyer Matthew T. Nelson, says auction sales follow historic practice without fair market value guarantees.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
Builds on 2023 Tyler v. Hennepin County ruling that governments can't keep surplus equity beyond tax debts.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
Justices like Neil Gorsuch and Ketanji Brown Jackson noted the harsh facts during oral arguments.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

Details and context

The case stems from a paperwork mix-up on a principal residence exemption, leading to delinquency notices despite court wins for the family. Foreclosure proceeded anyway, highlighting risks in Michigan's tax sale process where owners can lose properties even over disputed small debts. The Pungs, including Marc and Tia, lived in the home as their "American dream" before the loss.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

Lower courts allowed recovery of surplus but not full fair market value, prompting the Supreme Court petition in late February 2026. This is the 21st case from Pacific Legal Foundation at the high court. A decision is expected by June 2026, potentially affecting tax foreclosure rules nationwide by testing if auction prices count as "just compensation."[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

Key quotes

Tia Pung: “All the things thinking there’s not a chance in hell they could actually take the house for this reason... Well, naively, ignorantly, we were wrong.”[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)
Justice Neil Gorsuch: “It seems a $2,000 tax bill led to taking someone’s home, a sale for a third of what it’s worth and then very promptly the whole value is secured by the person who collected it out of the foreclosure... It’s a striking set of facts.”[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)

Why it matters

A ruling could redefine "just compensation" in tax foreclosures across the U.S., limiting government power to seize full equity via low auctions. Homeowners facing small tax disputes risk losing life savings unless fair market value is required, while counties say it would upend collection practices. Watch for the decision by June 2026, which may clarify protections but could face limits tied to historic auction norms.[[1]](https://www.mlive.com/news/2026/04/michigan-family-lost-their-home-over-a-2242-tax-bill-now-the-supreme-court-is-taking-a-look.html)