Legislature allocates $109 million for property forfeiture class action settlement
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The Minnesota Legislature this session allocated $109 million to settle class action lawsuits after a 2023 U.S. Supreme Court ruling, which found Minnesotans had their money wrongfully taken under an unconstitutional state law.
The U.S. Supreme Court last year ruled 9-0 in Tyler v. Hennepin County that the county violated a woman’s constitutional rights when it sold her forfeited property for more than she owed in taxes and pocketed the difference, or the surplus.
The state in February agreed to pay $109 million to settle class action lawsuits filed on behalf of Minnesotans who lost their properties because of unpaid taxes while the counties kept the surpluses.
A Ramsey County judge will rule on the settlement, including notice to potential claimants affected by the state’s property tax forfeiture laws, said Minnesota’s Solicitor General Liz Kramer. A court date hasn’t been scheduled yet, but Kramer said she expects the judge to approve the settlement.
“This is one of those times where the U.S. Supreme Court gave us very clear guidance — that this was a problem that needed to be solved — and everyone was able to come together, and I’m just really thankful that we had the money in the budget and that the Legislature was willing to put this behind us,” Kramer said.
Once people receive a notice, they will have nine months to make their claim for the surplus; people will generally be entitled to about 90% of the forfeited property’s surplus, Kramer said.
According to the settlement agreement, Minnesotans are generally eligible for their surplus if their property was sold between 2016 and 2023, though in Hennepin County the timeframe is between 2012 and 2019.
Kramer said about 6,000 forfeited properties fall in the settlement’s timeframe and are eligible to receive part of the $109 million settlement. In some cases, counties have yet to sell the forfeited properties and are waiting to receive guidance from the Legislature. Once those properties are sold, the funds — expected to be around $27 million — will be returned to the state’s general fund.
The Legislature also approved new property forfeiture laws that require counties to sell properties through a public auction and, if there’s a surplus, notify owners that they are entitled to file a claim for it. The new laws were passed in an effort to make them constitutional.
The changes to the state’s property forfeiture laws were included in the more than 1,400-page omnibus bill Democrats passed in the final minutes of the session, which Gov. Tim Walz is expected to sign.
Walz already signed the bill allocating the $109 million, which was a standalone bill.
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