THERE’S A RED HOUSE on Penny Place with three bedrooms, a fireplace, and baby pink tile in the bathroom. In 2022, Ulster County foreclosed on the home, in Ellenville, after the owner failed to pay a $13,390 tax bill. A company called Blue Door Housing bought it in a public auction for $103,200, and the county earned nearly $90,000. The former owner was left with nothing.

“It’s really, really devastating for people who have worked for 30 or 40 years to pay off their mortgage to lose this money this way,” said Tanya Dwyer, a foreclosure lawyer in the Hudson Valley. “It’s their retirement safety net. It’s the generational wealth their family has been building by protecting the house.”

Last May, the United States Supreme Court ruled the practice unconstitutional in Tyler v. Hennepin County, arguing that a municipality keeping the surplus money in a tax foreclosure sale violates the takings clause of the Fifth Amendment. In 2015, Geraldine Tyler, an octogenarian living in Hennepin County, Minnesota, had her condo foreclosed on after failing to pay a $15,000 tax bill. The county sold her condo for $40,000 and kept the surplus $25,000, leaving Tyler — like the former owner of the house on Penny Place — with nothing.

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