Supreme Court Rules County Can't Keep The Change

Local governments—generally counties—impose property taxes on real estate pursuant to state law. Sometimes called ad valorem taxes, these property taxes are set based on the assessed value of the property. When a landowner does not pay their property tax, the law allows the county to foreclose on the property and sell it to another person.

The purpose of this sale is to make the county whole for the tax debt. In most states, if the property sells for more than the debt and there are excess proceeds, then the landowner receives the surplus after valid lienholders with priority are paid—this is the rule in California and Nevada, for instance. Sometimes there is a limitation on the amount of time the former landowner has to reclaim their excess proceeds. But Minnesota, since 1935, has had a different system. In Minnesota, if a person fails to pay their taxes (and any associated penalties and interest) the county can obtain a judgment against the property that transfers