Episode Transcript
[00:00:00] Speaker A: It would spell the end of tax sales in America.
[00:00:04] Speaker B: Why does this matter to me? How does this affect me?
I'm already investing. I'm handling it. It's going well.
[00:00:11] Speaker A: Pung affects every single type, all the way up to potentially the judicial tax sale process.
So Peng could be bigger than Tyler. If you side with the petitioner and write the opinion the way he wants it written, we're going to eliminate this entire industry.
[00:00:31] Speaker B: Quick note before we continue. Nothing we discuss in this podcast should be considered legal, financial or investment advice. Tax lien laws vary significantly by state, and every property situation and investor is unique. Always consult with qualified legal and financial professionals in your jurisdiction before making any investment decisions.
Now, let's get back to the show.
Welcome to the Innovative Investor Podcast, where technology and industry experts combine to make tax sale investing success a reality for everyone. I'm your host, Stephen Morrell, founder and CEO of Jurisdeed, and I've spent the last 20 years in distressed real estate title law, including developing a program that transformed over 10,000 blighted properties in Louisiana back into productive use.
That work has led me to here on a mission to democratize access to delinquent property tax lien investing and make it as easy as watching your 401k grow. Today's episode is different. We're bringing in a guest, and this one matters. The U.S. supreme Court is right now deciding a case that could fundamentally reshape the rules of tax sale investing across the country. It's called the Pung v. Isabella county case, and whether you own two liens or 2,000, what the court decides this summer will affect how you underwrite, how you exit, and how exposed you are investing in this space. My guest is Matt A.B. a partner at Nelson Mullins Riley in Scarborough, one of the nation's largest law firms and one of the country's leading attorneys in tax lien resolution and litigation.
Matt has represented tax lien investors, mortgage servicers, and financial institutions in more than 30 states. He's a regular speaker at the National Tax Lien association and just co presented a national webinar on exactly this case. In other words, if there's one attorney you want guiding you through what's at stake before securing Supreme Court rules, it's Matt AB So let's get into it. Matt, welcome to the Innovative Investor podcast.
[00:02:27] Speaker A: Yeah, thanks. Thanks for having me. Excited to talk about Pung and what that might hold a little bit later this summer.
[00:02:34] Speaker B: Cool. Awesome. Well, that's what we're going to get into, so I'll start with a Question that sets the table for everyone listening.
So you've watched the entire arc from the Tyler v. Hennepin in 2023 to where we are today with the punk case.
So when did you first realize this case was going to be significant, and what was your first reaction when SCOTUS agreed to hear it?
[00:02:57] Speaker A: Yeah, so we track these cases as they're filed before the United States Supreme Court.
As your listeners probably know, you don't get to appeal generally directly to the U.S. supreme Court. You have to ask them for permission to appeal. It's called a petition for writ of certiori. And so we've got some notifications that are out there that let us know when these types of cases are filed.
And this is one that wasn't really on my radar originally because it wasn't filed by an entity called Pacific Legal foundation, which usually files these types of takings cases within the tax sale context.
So I was more focused on two other cases that were before the court, all petitions that the court ultimately decided not to take.
But this one, when we found out and dug through the briefing on the cert petition, you know, I really thought that this could be bigger than Tyler versus Hennepin County. And the way that I've tried to explain it is if you look at tax sales on a continuum, right? There's on one side of the spectrum, there's the absolute forfeiture type of process, and that was what Hennepin County, Minnesota used in the case. In the Tyler case. Then you go all the way to the other end of the spectrum, which is a full judicial foreclosure process.
Think the state of North Carolina, for example, where the county actually files a lawsuit, serves everybody with process, and ultimately there's a foreclosure sale. So Tyler versus Hennepin really only dealt with that first subset. Maybe there was another couple subsets of tax sales.
Pung, however, deals not with the tax sale process directly, but with the outcome of it, which affects every single type all the way up to potentially the judicial tax sale process. So pung could be bigger than Tyler, and it could affect a number of different states, depending on how the court decides it. So it was something that certainly had my attention when we heard that the court was going to take the case.
[00:05:12] Speaker B: So a lot of our listeners are not. Don't go to the National Tax Lien Association. They don't. They are not at the institutional level, and some of them are, but a lot of them are not. A lot of them are just like, you know, listening to podcasts Thinking, how am I going to be successful investing in Louisiana or in South Carolina? And thinking, like, why does this matter to me? Like, what is, what, what is this? How does this affect me? I'm, I'm, I'm already investing. I'm handling it. It's going well. But break it down for our listeners who may not be attorneys. And what exactly happened to the Peng family? And why should every tax lien investor care about what's going on here?
[00:05:50] Speaker A: Yeah, so the Peng family, the actual petitioner in the case is an heir of the owner of the property. The owner of the property had purchased this house in Isabella County, Michigan, long time ago.
When he passed, the Peng family wanted to keep the property, but they had an ongoing dispute with the local tax assessor, the tax assessing official, about whether or not the family should have gotten what's called a principal residence exception. And the principal residence exception would have meant that the family didn't have to pay taxes. Property taxes for X number of years. I think in Michigan you have to renew that every so often.
Part of the. Some of the administrative courts in Michigan and ultimately some appellate courts agreed with the Peng family.
But there was one particular year that somewhat slipped through the cracks, and I want to say it goes all the way back to about 2013.
The principal residence exemption was not applied for the Peng family, and so they ended up owing somewhere around $2,000 in taxes. Rough roughly, that $2,000 in taxes ultimately led to a tax sale in about 2019 of the property.
And the tax sale of the property, when it was actually auctioned off, ended up auctioning the property for somewhere around 76,000.
And that created a surplus between the 2000 and the 76,000 of roughly 74,000 bucks.
Now, under Tyler, the court would rule that that surplus proceeds, that the county couldn't just take that right, that the county had to have a mechanism in place for the Pong family to, to claim those surplus proceeds. But Mr. Peng wasn't satisfied with that. He wasn't satisfied with just getting the overage or the overbid or the surplus.
He wanted something more. He wanted the fair market value for the property.
And the way that he calculated the fair market value was that instead of the surplus proceeds, he looked to what he thought the property was actually worth. And he used a couple different points, data points, to decide what the property was worth. He looked first at the assessed value of the property, which was somewhere around $194,000.
And the assessed value, of course, is a county valuation that's used your Listeners, of course, know that assessed value and market value are different things, right? And very. When we're, when we're thinking about both assessed value and even market value, that's not a static point, right? That fluctuates with the market. It fluctuates with the time of year, the season. I mean, there are all kinds of different things that can cause both assessed value and market value to change.
But he, he looked and he said, well, county, you've said that this property is worth about 194, 195,000. So that's a good starting point. But then he also took another data point. After the tax sale auction occurred roughly 18 months later, the winning bidder at the auction sold the property for $195,000. Roughly.
Now that $195,000 was some 18 months later. And I think the bidder had gone in and refurbished the house and put some money and time and effort into it.
But he said, Mr. Punk said, well, that 195,000 approximates the 194,000 that the county said it was assessed. So to me, that means 194,000 is a pretty good fair market value. So I want difference between that $194,000 that you assessed it at and the roughly $2,000 that I owed in taxes that caused it to go to tax sale. So that's a far cry. $192,000, of course, is a far cry from the roughly $74,000 in surplus proceeds. And so he has sued to try and get that money back.
And Watts, the. The Supreme Court to decide that the proper measure of damages in a takings case is looking at the difference between the fair market value and the taxes that were owed, rather than looking at what the property actually fetched at the auction.
[00:10:22] Speaker B: So in plain English, the county took $194,000 home to collect a $2,200 debt, sold it for $76,000, and then that buyer flipped it for 195,000 the next day. Am I getting that right?
[00:10:37] Speaker A: So that's pretty close.
But let me put a couple caveats on there. So, one, the county didn't just sell it, right? There was no open market where there was an arm's length transaction, inspections of the property, due diligence and the like. They auctioned it off to the highest bidder. Okay, so that's one thing. Then the second thing is that the bidder at the auction didn't just flip it the next day. I mean, he had some. Some money and sweat that he put into the property. And also it took about 18 months from the time that he got the title until the time that he sold it. So, as we talked about earlier, market valuations can change. They can fluctuate season to season, day to day even. And so imagine how much that market value may have fluctuated from. From the time of the auction until the time he actually. The bidder actually sold it.
[00:11:30] Speaker B: Right.
So framing this back towards the. The Tyler Hennepin case, again, I think that's a. That was, you know, a big. A nice contrast.
But also to kind of put it in perspective of what we're up against here, it seems to me like the Tyler Hennepin case told the government, you just can't pocket the surplus.
You have to have some reasonable methodology of trying to get that back to the. To the homeowner if there. If it's. There's enough leftover. But then pung is asking, how do you define what is the surplus?
Why does that distinction matter so much in practice?
[00:12:12] Speaker A: Yeah, so. So you hit the nail on the head with Tyler, and one of the phrases from that opinion is, render unto Caesar what is Caesar's but no more. Right. So the concept of you owe taxes, right? You have to pay taxes, and a tax sale of your property is not a unconstitutional taking. The county, local government, the state, even the federal government has the power to tax and has the power to enforce that tax. It just can't take more than what is owed. It can't keep that property, and as you said, pocket the extra over and above what is owed.
And so Pung, though, wants to take it a step further. And he wants to say, well, how do I know that the surplus really is the fair market value or is the just compensation that I'm owed? Aren't we supposed to look at the difference between what I owed the county in the fair market value rather than the difference between what I owed and what this property fetched at a public auction? And he wants to look at the valuation a little bit differently. And the way that he strings this argument together is in takings cases, cases, you know, eminent domain, where the county's seizing your house because they're building a railroad or a sidewalk or something.
The county has to value the property looking to what is the monetary equivalent of what the county is taking from you? And the county has to also value it in a way that doesn't look at what the county gains. It doesn't look at what the local government gets as a result of the imminent domain or the taking it Looks to what you. The homeowner loses.
And so he says, in my eyes, Mr. Punk says, I lost a house that was worth $195,000, and so you should have to pay me the difference using that valuation and not the bid at the sale.
[00:14:12] Speaker B: Interesting.
So, yeah, there's a lot going on there.
You know, the time frame of when that mar. When that valuation happens to be captured, what intervening steps have occurred along the way, market changes, the, you know, the gentleman who bought it, fixed it up. I mean, all these things that he wants to take credit for. But then I. You get his side of it. It's like, hey, that's what you took from me. You know, it was. That's that those opportunities for increase in value are what you took from me. So it's interesting.
Now, you. You watched the oral arguments before the Supreme Court on February 25, and not going to get you to, to pull out the Magic 8 ball and predict the outcome here, but just based upon what you observed from hearing the justices speak and, and the questions that they asked back, you know, what. What were some things that stood out to you?
[00:15:01] Speaker A: Well, a couple of things that stood out to me is that this is not the type of case before the U.S. supreme Court that falls into, like, neat ideological lines.
So it's not a social issue that, you know, sometimes you can group the justices into ideology.
They were all over the place as far as the questioning. And what you would traditionally expect, maybe from one justice at one end of the spectrum was completely different from a Justice at the other end.
What stood out to me, though, is the justices are looking at this as a little bit different from your traditional takings case. So this is not the example that we gave. I gave earlier the railroad or the sidewalk. This is not a situation in which the homeowner is not to blame for putting us in this circumstance. So in a traditional eminent domain case, the homeowner is just living in their house, and one day the county decides they need to put a roadway where that house goes. The homeowner has no fault. They didn't ask for the roadway. They didn't ask for the local government to come in and do those kind of things. They're truly an innocent party that's entitled to fair market value for what the government is taking here, though pung has a role in this situation.
The government, as we said earlier, has the right to tax, and they have the right to enforce that tax.
And Mr. Peng, who could have paid the tax, could have obtained a loan to pay the tax if he had some financial hardship, could have applied to the local government for some type of forbearance or payment plan or any other types of workouts that would have helped him in this situation.
Or Mr. Peng could have sold the property to a third party for whatever he thought it was worth listening.
[00:16:56] Speaker B: Wasn't there a redemption period at play here where there was a time period to pay it back without any foreclosure consequences?
[00:17:02] Speaker A: Exactly. And so there's all these things that Mr. Peng could have done. Instead, he chose to say, well, the county or the local courts and the appellate courts had ruled in me for these other years, and so therefore, I'm entitled to this exemption for the year that calls the tax sales. Well, so he has a role in. And one of the things that jumped out to me was Justice Brown Jackson.
She emphasized the fact that the Constitution says just compensation.
So what really is just when you have a role to play in causing the tax sale, causing the government to take your property, maybe that's a different measure of damages than you're used to seeing in the other hypothetical scenario where the county needs to take your property to build a road for the public good.
[00:17:53] Speaker B: Interesting.
[00:17:54] Speaker A: Yeah, yeah. So it's slightly different. So that stood out to me.
There was also another thing that stood out to me was a couple of the justices were asking whether or not this issue really was preserved.
And when I'm talking about issue preservation, the appellate courts are courts of review, not courts of first review, meaning they only look at decisions that are made by lower judges, by circuit courts, and, of course, district court judges, and in certain situations, state courts. So in order for the justices to decide a question, usually it has to be presented and ruled upon below. The court doesn't like. The high court doesn't like to get into deciding cases in the first instance.
And they also usually like to take cases where we have a circuit split or we have multiple different courts around the country have analyzed this issue and come out in different ways. And one of the reasons the court likes to do that is they get the benefit of the arguments mature over time or percolate, as some lawyers would talk about, gets you to better briefing, gets you to better decision on the merits. And so it was interesting to me because a couple of the justices pointed out that a lot of the arguments Mr. Peng is making really wasn't considered by the circuit court.
The circuit court just decided that in all cases, the measure of damages for the takings clause is the surplus. And they really didn't get into any of these other Issues. And one of those issues would be, was the auction fair, was it conducted fairly?
And that's a position that was, that was brought in by the federal government.
So the federal government filed something called an amicus brief, which is a friend of the court brief, usually at the high court, in some circuit courts across the country, industry groups or other interested groups who are not necessarily parties to the case, but they have a, they have an interest in the outcome. They can file a brief to have their views be heard by the court. And a lot of times at the high court, you get a number of amicus briefs that just give the justices some perspective as to how their ruling might impact a particular industry or particular group of people.
And so the federal government often files amicus briefs in the case in cases before the high court when they're not a party.
And in his case, the federal government had a big interest here because the federal government conducts its own tax sales and there's a tax sale statute and procedure that's out there.
And they wanted the court to look at the issue from a little bit different angle. They said that the surplus proceeds can be the proper measure of damages when you're looking at just compensation, so long as the auction was conducted fairly. And that sounds all well and good. I mean, sounds like a reasonable position to take. But the problem is, as Justice Amy Comey Barrett pointed out, the fairness of the auction really wasn't something that was decided below.
And fairness is a quite nebulous concept because what might be fair to the tax collector who's auctioning off the property may not be fair to the guy who is losing the. The family homestead. Right.
So that, that was another thing that stuck out to me.
[00:21:33] Speaker B: All right, I'm going to put you on the spot here.
Most likely outcome, what you read, what you take straight up, give it to me.
[00:21:41] Speaker A: So I think that the justices are likely to take this middle ground approach suggested by the federal government.
And although I think it has some problems and creates some issues, I, I think that's the easiest way for the court to get this back in front of the circuit court for them to dig a little bit deeper in this. And the reason that I say that is not necessarily that that's the outcome I want. I have some clients that would like that. I have some clients who would absolutely hate that outcome because we represent clients from both ends of the spectrum within the tax lien industry.
So the reason that I think the justices are likely to go there is there are some facts in this case which are kind of Sticky.
And they just, they something just doesn't smell right. It's so odd that we have a case in front of the United States Supreme Court where we don't really know if Mr. Peng actually owed the $2,200 in taxes or not.
That's. You could have a situation where Mr. Peng has lost this property and he truly didn't owe the tax. And we don't, we don't really have clarity on that issue. And I think that some of the justices are frustrated by that potentially that they don't like the facts.
And, you know, there's an old adage that says that the bad facts make bad law. And I think that if the court were to seize just on that and say, oh, yeah, well, we've got to clean this whole mess up and create some sweeping rule, because we don't like the fact that Mr. Peng may or may not have owed this 2,000, $2,200 in taxes. I think that they're cognizant of that and they'll want to do something a little bit more narrow.
The oral argument suggests that they are. They're concerned about just lobbing a bomb into years of jurisprudence on the takings Clause and issuing some sweeping rule because there are so many different types of tax sales across the country that each state has their own little nuance and their own historical practice over years of how they arrived at that particular tax sale mechanism. Right. So I don't think that the justices are keen on wanting to issue some sweeping ruling. They could apply to 50 different types of tax sales across the country and throw a wrench in this.
[00:24:11] Speaker B: That's a good point about. Because the different systems, and a lot of our listeners are familiar with the top most, you know, the highest level, there's tax lien states and there's tax deed states, and of course, there's some hybrids and variances between those. But are lean state investors, you know that where the investor is going to buy the lien certificate and doesn't take title directly at that, at that sale, are they more protected from potentially a pung fallout than, than the deed state investors or any. What's your thoughts on that?
[00:24:43] Speaker A: So I do think that the punk case doesn't distinguish between liens and deeds. I don't think that it'll. It'll largely, of course, depend on how the Supreme Court writes the opinion, because they could write it very narrowly just to apply to one subset or the other. And then of course, that's going to spawn all kinds of litigation. After POM across the 50 states.
But the question is a little bit more fundamental and doesn't really deal with the type of tax lien procedure or tax deed procedure at the local level. It's really just looking at what does the Constitution mean when it says just compensation when we apply it in the enforcement realm rather than the imminent domain realm.
[00:25:35] Speaker B: It seems like this might be relevant to the Nebraska case too. Also the fallout, potential fallout from Pong, where the private investor as a state actor risk becomes relevant.
You know, even Maryland in their case echoed that same or similar kind of sentiment.
Do you think is this the bigger issue, kind of sleeping giant in the room right now with this whole thing? I mean, you know, investors are, should I. Am I going to subject myself to liability or to some kind of detrimental effect? You know, if I get involved here? You know what, walk me through that. What's your thoughts there?
[00:26:11] Speaker A: Yeah. So the U.S. supreme Court in Tyler left side several questions open.
They left open how much should be paid in just compensation, which is the question that Peng is going to answer.
It also left open, how does this excessive fines clause come in? And it left open, what is the right type of tax sale. I mean, that wasn't a question that was addressed, but it also left open the question of who pays, Right? I mean, who pays this just compensation to the taxpayer. The court just didn't wrestle with that decision. But what it did, at the same time it decided Tyler, it also did what we would call a GVR grant, certiori, vacate and remand two other cases out of Nebraska. So the Nebraska Supreme Court had issued two opinions around the same time as the court in Minnesota in Tyler, and so on remand after the US Supreme Court said, hey, we just issued this Tyler opinion. Why don't y' all look back at this and look at it again.
The Nebraska Supreme Court held another round of briefing in those two cases, held oral argument and issued a new opinion. And as a part of that opinion, the court, the Nebraska Supreme Court, answered the question of who pays. And in that case, it required the investor, the party who actually got the deed through their administrative process and required them to pay the just compensation.
So there was a little bit of a quirk in that case.
The attorney general had been dismissed from the case some months earlier, actually some years earlier, since this went through the full appellate process.
And so there was no government actor left in the case at the time the Nebraska Supreme Court Supreme Court resolved it. And so the only one left without a chair at the time the music stopped was the investor. So there may be a little bit of a question of does the government share some responsibility? But if you take that Nebraska Supreme Court case and apply it in other context, and you apply it potentially with a outcome in pung that requires fair market value to be paid, you could have a situation where both investors and the state government or local government is responsible for paying the just compensation. I mean, you really could have a situation where an investor shows up and bids at the tax sale and they are factoring in all kinds of things, you know, risk, what the upside is, you know, what they think they could flip it for.
[00:28:53] Speaker B: Right.
[00:28:54] Speaker A: Then lurking in the background is, well, I didn't pay fair market value and I could have somebody come out of the woodwork later on and sue me for the true fair market value of the property. That's really going to change what you bid it.
[00:29:09] Speaker B: You and I have talked about this, you know, in other circles, most recently at the National Tax Lien association conference in Fort Lauderdale.
But it seems to me like, like this, what it, what should happen here is an analysis of whether the auction was reasonable. So, you know, we talked about the correlation to the back to the Mennonite case of providing notice, the due process context. You know, what is the methodology that makes it okay for a government to move forward with the sale?
What level of efforts are good enough? Right. And in that case, the course the Supreme Court said what is reasonable is going to be under the circumstances at the time it's evaluated by, you know, the reasonable person standards.
In 1983, the Internet wasn't around, or at least not to public use. And then, you know, so 20 years later, if you're not using the Internet, you're probably wrong. It's probably unreasonable. Right. So it changes. So it seems to me like this could be applied in the, the government auction context. You know, the outcome is maybe less, should be less the focus than the process of getting to some outcome, whether that process was reasonable. What are your thoughts on that?
[00:30:24] Speaker A: Yeah, so, so two points there. I'm glad you brought that up. One of the justices really asked during the oral argument, are we looking at this question the right way? Is is this really a takings question or is it a due process question?
And that creates some issues because due process wasn't briefed really. I mean, that's not the issue that was in front of the court. But really when you're talking about things like fairness and what happened before for the auction, the notice, whether it was published, whether it was widely circulated and such, that you had enough people there at the auction raising paddles to bid up towards market value. That's all pre auction. That's all pre taking. And so is that really a takings question?
And we don't know the answer to that.
That could create some issues for later.
But also when we're talking about use the reasonable person standard, when we're talking about what's reasonable or what's fair, that's going to be highly circumstance dependent. It's going to be highly fact specific. And generally when courts are looking at fact questions, those are questions that a jury or a fact finder need to resolve rather than a judge wearing a robe.
And that might create a lot of new litigation over what, what procedures are fair, what procedures are reasonable. And that analysis is more of a collective decision making that goes in instead of just a judge saying what's reasonable and what's not. So with that question and the due process issue that's lingering out there, we could have an opinion that comes out that says so long as the auction process is fair and open to the public and properly advertised and whatnot, then the surplus is sufficient. But we're going to let the lower courts determine what fair means and what, you know, conduct somewhat of a due process analysis within the takings, the greater takings analysis. So that could be the next wave of litigation that we see after this opinion.
[00:32:32] Speaker B: Yeah, it certainly is interesting to watch. It seems to me that there's precedent for how the court has tackled this kind of issue in the past in the sense that of they. Where they settle on. Right. Where they settle on. This is where our, our place. Where is our place in all of this? The Supreme Court, you know, and granted the, the particular justices on the court will influence that and who appointed them, but for the most part, you know, is, is that, is the, the, you mentioned the pre taking activities, the publication, the, the level of noticing, is that really, if it's pre taking then is that really part of the taking?
And I would argue that it's all part of the process that takes. Right. It's like, you know, is, is this, did it, did one person, the only, the only one person find out about the auction? So therefore there was a bad outcome. Right. But if everybody, because this also makes me think about mortgage foreclosures like this, like how is that constitutional? How they've been. No one's ever challenged mortgage foreclosures or even had a complaint about, not constitutionally at least. And so it seems like what, what if we just mirror that, you know, what Everyone tried in true mortgage foreclosures, like why couldn't that work? And just say do that and we'll be okay.
[00:33:50] Speaker A: Yeah, yeah. And there are some states that apply very similar rules for mortgage foreclosures and tax lien foreclosures. But then you have some that are completely different. Now I'll give you two examples.
My home state of South Carolina, as compared to my neighbor to the North, North Carolina Carolina have completely opposite procedures. So North Carolina, for mortgage foreclosures they do a non judicial method. It's a trustee who goes through a process before the clerk. And it's very administrative, very, very quick process.
But for tax sales, they do full judicial process. It is a lawsuit filed by the county against the taxpayer and lienholders where the property is auctioned off and there's a confirmation process at the end.
South Carolina is the exact opposite in both scenarios. So South Carolina has full judicial foreclosure. It is a plenary proceeding, service of process, and a judge sells the property. But for tax sales, the treasurer or tax collector, depending on the county, they are the ones that do all the noticing, all the auction. They collect all the money during the one year redemption period and then they issue the deed on behalf of the taxpayer. So you can have these kind of, these flips within two neighboring states and two neighboring or two very similar types of auctions, meaning foreclosure and tax sale. Yet they have diametrically different procedures and mechanisms in place.
So certainly there's a way where you could make tax sales and foreclosure sales look very similar.
But that wouldn't necessarily resolve the constitutional question here because in the mortgage foreclosure space, you've got a private contractual relationship that gives rise to that foreclosure. In the tax sale space, that is government action that is occurring. And so they, they look very similar, but they have different constitutional implications.
[00:35:59] Speaker B: All right, I know we're running up close on our time limit here, and so I want to be cognizant and respectful of your time. But I just want to ask you one last question, something that I'm starting to ask the our guests on at the end of every episode, which is something I call the deed line, which is in the Innovative Investor podcast, the deed line.
It's where the rubber meets the road. I mean, you're doing this because you're trying to make a return and the deed is the thing that will get you there. So here it is. Here's what I'm asking you. If you had to Write one sentence, just one, on the deed of this moment in tax lien law, what we're talking about today, something that captures what investors, homeowners, policymakers need to understand about where we stand right now. What would that one sentence say?
[00:36:41] Speaker A: Ooh, that's a tough one.
If we're talking about just what, what is at stake in this U.S. supreme Court case.
I don't know if I could say it better than Justice Kagan and the Solicitor General who appeared for the United States.
Justice Kagan asked, so what would it mean if we said that the measure was fair market value with respect to the foreclosure sale? So she was asking if we ultimately agree with the petitioner and say fair market value, not the surplus, is what just compensation says.
The Solicitor General, on behalf of the federal government said it would spell the end of tax sales in America. Every tax sale is necessarily going to yield less than fair market value.
And if you sit back and think about that, I mean, that's pretty powerful, right? You've got the federal government telling the U.S. supreme Court that if you side with the petitioner and write the opinion the way he wants it written, we're going to eliminate this entire industry. And, and that will have implications for tax collectors, treasurers across the country. It will have impact on investors, but it also is going to impact the taxpayers, because the taxpayers, the way that the tax base works is you spread that those taxes out across everyone to pay for schools and roads and firefighters that come when your house is on fire.
And if you don't have tax sales, the government has to find some other way to plug that budget gap. And tax sales traditionally have been the way to do that. And so the Solicitor General I think may be right.
And that's what's at stake in this case. So it's something I think investors really need to follow, but so do taxpayers, just in general.
[00:38:34] Speaker B: So that was a really long one sentence, but we're going to, we're going to allow it. The judges will allow it. Thank you, Matt. Seriously, that's the deadline for right now, this moment in tax sale investing. Write that one down, everybody. Matt, seriously, thank you very much for being here. This is exactly the kind of conversation our listeners need right now, before the ruling drops, before the market reacts, and before everyone is scrambling to figure out what it means for their portfolio a la Tyler. You've got to give, you've given them a real head start today with this kind of information. So for everyone listening, we'll absolutely link Matt and Nelson Mullins in the show notes. And if you're an investor with exposure in in lean or deed states, as Matt pointed out, it might be. It might impact both or, or neither or one or the other. Pay attention to what's going on here. And if you're managing a portfolio of any, of any size, or if you're just trying to understand where the industry is heading, reach out to Matt's team for help.
Having the right legal counsel in your corner before something like this lands is not optional anymore. It is part of the business. And it's exactly why we built jurisd. Because the rules of taxing investing are being rewritten in real time, state by state, courtroom by courtroom. And the investors who will win in this environment aren't necessarily necessarily the ones with the most capital.
They're the ones with the best intelligence, legal title and market. Before you start bidding. If you want to stay ahead of cases like pung, track state by state law changes and invest in tax liens like a pro without having to be one, head to jurisd.com and get on the wait list. Now. We're building the platform that makes all of this manageable. And if today's episode was valuable to you, please subscribe, leave a review on Apple Podcasts or Spotify and share it with one person, your network, who invests or is thinking about investing in the real estate debt. And that's how we'll grow this community. For now, I'm Stephen Morell. This is the Innovative Investor Podcast. See you next time. Thanks.
