A U.S. Supreme Court ruling that put the kibosh on a practice that robbed property owners of money raised to pay delinquent taxes may end up costing Ulster County millions. Six Ulster residents have already sued the county for recompense, the tip of an iceberg that includes residents of counties throughout New York and 18 other states.

The Supreme Court ruling came last May in the case of Tyler v. Hennepin County. As the court described it:

“Geraldine Tyler owned a condominium in Hennepin County, Minnesota, that accumulated about $15,000 in unpaid real estate taxes along with interest and penalties. The County seized the condo and sold it for $40,000, keeping the $25,000 excess over Tyler’s tax debt for itself. ... Tyler filed suit, alleging that the County had unconstitutionally retained the excess value of her home above her tax debt in violation of the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment. The District Court dismissed the suit for failure to state a claim, and the Eighth Circuit affirmed.”

Not so fast, said the Supremes, reversing the lower courts. Unanimously, they called the Hennepin foreclosure “a classic pocketbook injury,” cited the principle that “a government may not take from a taxpayer more than she owes” and ruled that, “The taxpayer must render unto Caesar what is Caesar’s, but no more.”

Closer to home, in reliance on Tyler, six Ulster residents have filed a takings case against Ulster County in U.S. District Court in Syracuse. Per their complaint, Anne Wallace owed $13,390 in taxes on a Wawarsing home auctioned off for $103,000; Mark B. Plate and Joann O. Chamberlin owed $4,000 on a Saugerties home auctioned off for $23,200; Anthony and the late Carmine R. Carusillo owed $33,636 on a Shawangunk home auctioned off for $134,000; Kevin H. Smith owed $36,558 on a Marlborough home auctioned off for $66,700; and Michael R. O'Keefe owed $5,480 on a Wawarsing home auctioned off for $46,000. All six want the excess returned to them with interest and including court costs.

The Ulster plaintiffs' attorney, Utica-based David Giglio, has filed 23 other such cases against New York State counties. On the question of retroactivity, he told Kingston Wire he plans to ask the court for a three-year look-back period, encompassing his clients' foreclosure dates. He said that time frame has already been approved by the court in another of his cases in Schoharie County. He said he feels his case is “clear cut” but declined any prediction other than, “We hope to win.”

How many other such cases might Ulster County be looking at and how much might they add up to if the county has to reimburse former homeowners? Based on a study of county foreclosure auctions over the last five years, County Comptroller March Gallagher estimates the number at $6.4 million.

Gallagher's estimate comes with a major caveat: While Tyler put an end to the confiscation it did not address how to make whole the former homeowners or how retroactive such compensation must be. “We understand the ruling,” she told Kingston Wire. “Going forward we'll keep a segregated account for surplus from sales.”

Gallagher emphasized that the foreclosure surplus practice was not exclusive to Ulster County or New York State and described its rationale as a counterweight to the many foreclosures that return less than the taxes owed. “It can seem unfair,” she acknowledged.

If it does come to court-ordered recompense for the former homeowners, Gallagher made clear her office's reluctance to get involved. “We'd need to determine the lien holders on all the properties — a huge administrative burden.”

The county officials most likely to end up with the job — if it comes to it — are Commissioner of Finance Roseann Daw and Ulster County Real Property Tax Service Agency Director Tracey Williams (or their successors in office), both named defendants in the Ulster lawsuit. Kingston Wire has reached out to both for comment and not heard back. Albany attorney Justin Gray, who represents the county in the federal case filed in Syracuse, declined to comment before deadline, citing his need to first consult county officials.