New Jersey’s Supreme Court is poised to decide whether municipalities are on the hook for millions of dollars in excess takings from tax sales made years ago, with several justices appearing skeptical of arguments that would allow governments to retain the money.
The case before the high court asks whether East Orange owes Lynette Johnson thousands of dollars in excess equity the city retained when it sold her home for more than Johnson owed in back taxes, utilities, and fees. The court’s decision is likely to have major implications for municipal finances across New Jersey.
Johnson’s excess equity dispute is the latest to measure the effects of the U.S. Supreme Court’s 2023 decision in Tyler v. Hennepin County. In that case, a Minnesota woman named Geraldine Tyler owed the county $15,000 in unpaid taxes and fees, so the county sold her condo for $40,000 and kept the excess. The court ruled that by keeping the excess, the county violated the Fifth Amendment’s takings clause…