Jun 29, 2026
You wouldn’t think an outstanding property tax bill of just over $2,000 could cause someone to lose their entire $200,000 home — but for one Michigan family, that has been the unfortunate reality. And the process was, somehow, perfectly constitutional.
The recent Pung vs. Isabella County case has served as a shocking lesson in how unfair and even nonsensical foreclosure sale rules can be, and how easily citizens can lose everything if they fall behind in paying off even a small amount of municipal debt.
The owners received next to nothing
The overdue taxes in question, which totaled $2,242, constitute less than a year of dues in the central Michigan county for a home at the named price point, according to the state’s calculation tool.
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But, the Pung family was so delinquent in their payments that the home went into forfeiture and then foreclosure before finally going to public auction in order for the county to recoup the fees.
Though this is the standard procedure in the state and takes place over multiple years, the owners’ situation was unique in that they had disputed their levy amount with the Michigan Tax Tribunal, as assessors had denied them the principal residence property tax exemption that they were due. Following the tribunal matter and a second round of litigation for the same issue — both of which ruled in their favour — they refused to pay, even after multiple notices.
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The kicker of injustices here, though, is that after seizing the Pungs’ property, the government sold it for a mere $76,008 — less than half of its worth, according to the very assessment which determined the property taxes that spawned the forfeiture in the first place.
Further proof of this valuation lies in the fact that the new owner was able to resell the home for its true value of $195,000 18 months after the purchase, taking an effortless profit of approximately $119,000. The Pungs, meanwhile, received less than $74,000 when all was said and done (the severely undervalued auction price minus the fees owing), a phenomenon that some consider equity theft.
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The court stood by its decision
In a civil suit launched by the Pungs after the entire ordeal, the Supreme Court stood by a precedent to “refuse to designate market value as the sole measure of just compensation,” arguing that auctioning a home at fair market value places undue “burdens on jurisdictions that wish to collect unpaid taxes and might well make tax sales impractical.”
As stated in the court docs, in such cases, “if the owner believes that the fair market value of the property exceeds the taxes that are due, [they] may be able to avoid foreclosure by refinancing the property, using the property as collateral for a new loan to pay off the taxes, or selling the property before foreclosure.”
The judge notes that “here, the Pungs had years to take these steps and avoid foreclosure, and failed to do so,” adding that “in such a situation, the traditional rule, under which the taxpayer receives only the difference between the auction sale price and unpaid taxes, is ‘just.’”
Earlier in the case, justices asserted that foreclosure circumstances, by nature, “mean there’s going to be a depressed price.” In the most recent development, on June 23, the Supreme Court ruled against the Pungs, but relayed the matter back to the lower courts, where the family can continue their challenge.
Given that more than five percent of American land owners were delinquent on their property levies in 2025, this story may not be as much of an outlier as it seems.
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Becky Robertson is a senior staff reporter at Moneywise and a lifelong writer. Along with more than a decade covering news at outlets like blogTO and Quill & Quire, she's attended writing residencies around the world. With 33 countries visited, she finds travel to be among her greatest inspirations.
