Short answer: In Pung v. Isabella County, the U.S. Supreme Court held that, when a tax foreclosure auction is fairly conducted, the former owner’s federal compensation for retained home equity is measured by the actual surplus sale proceeds after the tax debt—not the gap between an appraisal and the winning bid. For a New Jersey owner, the first question is whether the home itself will be sold. A tax sale certificate auction sells a lien, not the house. Under New Jersey’s 2024 law, an owner or heirs in an ordinary tax certificate foreclosure generally must request a sheriff’s property sale in writing to the Superior Court before final judgment to preserve equity through a sale.
That timing can be decisive. A homeowner who learns about a certificate foreclosure should obtain the complaint and notices, verify the redemption amount, and address the sale request immediately. The analysis changes for an allegedly abandoned property or a judgment entered before the 2024 amendments.
What the Supreme Court actually decided in Pung
Isabella County, Michigan, foreclosed on a home over approximately $2,242 in delinquent taxes. The property’s assessed value was $194,400, but it brought $76,008 at a public tax auction. The county initially retained the proceeds. The owner’s estate sought more than the sale surplus, arguing that the Fifth Amendment required the home’s fair market value. On June 23, 2026, the Supreme Court rejected that valuation theory: where the auction is fairly conducted in light of the country’s history of tax sales, the actual sale price supplies the constitutional baseline. The Court also rejected an attempt to obtain the market-value difference under the Eighth Amendment. Read the Supreme Court’s opinion in Pung.
The judgment was unanimous, though the justices wrote separately on parts of the reasoning. The Court vacated and remanded for the Sixth Circuit to consider whether the estate preserved arguments that this particular auction was unfair. It did not find the auction unfair or decide every feature that makes a tax sale constitutionally adequate. A sham auction and needless delay during a market collapse were discussed as possible problems, not decided as facts of this case.
Pung builds on Tyler v. Hennepin County (2023), which held that a government may not take the value remaining after a tax debt is paid by seizing and selling the property. Tyler recognized the owner’s interest in surplus equity; Pung answers the narrower question of how to measure it after a fair property auction. Neither case makes a tax assessment an automatic payout.
Why a New Jersey tax certificate is different from a home auction
New Jersey municipalities sell tax sale certificates to collect unpaid taxes. The certificate purchaser receives a lien and a right to seek foreclosure of the owner’s right to redeem after the statutory period. The certificate sale is not a sale of the owner’s house, and its bid or premium is not the home-sale price used in Pung. A separate Superior Court foreclosure can follow; a sheriff’s judicial sale or sheriff-run Internet auction of the property may then occur under the 2024 amendments.
In 257-261 20th Avenue Realty, LLC v. Roberto, 259 N.J. 417 (2025), the New Jersey Supreme Court held that the earlier Tax Sale Law could not constitutionally let a private certificate holder acquire a property’s surplus equity without compensation simply by foreclosing the right to redeem. The Court held that such holders can be state actors in this tax collection setting. It applied Tyler to matters on direct review, while leaving fact-specific questions about old judgments and remedies for later cases.
The 2024 New Jersey sale-request rule
P.L. 2024, c. 39, effective July 10, 2024, changed the process. In an ordinary action under N.J.S.A. 54:5-86(a), the owner or the owner’s heirs may demand, by written request to the Superior Court before entry of final judgment, that the certificate holder foreclose through a sheriff’s judicial sale or sheriff-run Internet auction. The required foreclosure notice must prominently describe that right. The statute allows foreclosure without a property sale if no timely demand is made and says the owner and heirs then have no equity claim against the certificate holder. It applies to liens whose redemption rights had not been foreclosed when the act took effect and does not disturb final judgments entered before that date.
In the separate route for a property that legally qualifies as abandoned under N.J.S.A. 54:5-86(b), the act permits foreclosure without the judicial sale and authorizes a judgment barring surplus-equity claims. Whether the property actually satisfies the abandonment definition and whether notices were legally adequate are important factual questions. A neglected-looking home does not establish abandonment by itself.
If a requested sale occurs, the sheriff pays the certificate holder the redemption amount and court-allowed costs and fees, deducts sheriff charges, and deposits surplus with the Superior Court clerk. Distribution follows N.J.S.A. 2A:50-37 and the court rules. The 2024 act also gives the certificate holder a first lien on the surplus for administrative costs equal to 10% of the surplus, capped at $5,000, as well as a route to seek certain unpaid approved costs. Other valid liens can reduce what ultimately reaches the former owner or heirs. Our guide to New Jersey foreclosure surplus funds explains the court distribution process more generally.
A simplified illustration
Suppose a home has a $300,000 appraisal, but a fairly conducted sheriff’s auction produces a $210,000 bid. Assume $40,000 is required for redemption and allowed sale-related charges. The initial surplus is $170,000, not $260,000 (appraisal minus $40,000). That $170,000 is a starting court-held fund, not a promised check: the statutory administrative lien could be up to $5,000, and valid competing liens may have priority. Actual amounts depend on the judgment, sale record, deductions, ownership, and lien priorities.
Does Pung validate every New Jersey tax foreclosure?
No. The federal holding concerns compensation after a fairly conducted property sale. The New Jersey statute calls a sheriff sale or Internet auction price conclusively presumed fair market value. Pung supports using the actual price as the federal baseline for a fair auction; it does not resolve an adequately supported challenge to a sham or otherwise unfair process. Nor did the Court decide whether New Jersey’s no-sale default after an owner misses the written-request deadline, its abandoned-property route, or every aspect of its notice scheme satisfies the federal Constitution. Those are distinct questions that require the record and governing law.
A disappointed owner cannot establish an unfair auction merely by comparing a bid with a tax assessment or an appraisal. Relevant facts may include notice, eligibility to bid, advertising and access, sale terms, timing, competing bids, and any evidence of manipulation. Those facts need to be investigated and raised in the proper proceeding; Pung did not supply a universal percentage-of-appraisal test.
Have New Jersey courts cited Pung since June 2026?
As of September 25, 2026, two publicly available opinions involving New Jersey properties cite Pung. Both are nonprecedential and turn on their own procedural records.
Ivy Holdings, LLC v. Tucker (N.J. Appellate Division, August 12, 2026)
In Ivy Holdings, LLC v. Tucker, No. A-2534-24, a private certificate holder had obtained a 2020 foreclosure judgment without a property sale. One heir asserted a 25% interest in the lost excess equity. The panel left title with the certificate holder but remanded to determine compensation for that heir and to revisit the contested abandoned-property determination. Because the judgment predated Chapter 39, the 2024 statute did not govern that judgment.
Without a home-sale price in the record, the panel described a possible appraisal-based method for valuing the heir’s interest at the time of taking, with the certificate debt and authorized costs deducted. In a footnote, it cited Pung for the possibility that if the holder later sells the property, that sale price may serve as the baseline if the sale is fairly conducted. This is a narrow illustration of the difference between a no-sale taking and a fair sale; it is not a ruling that every owner receives an appraisal amount. The remand also requires a closer look at the city’s abandonment notice, which had been addressed to a deceased owner.
Kemp v. Pro Cap 4 LLC (Third Circuit, September 2, 2026)
In Kemp v. Pro Cap 4 LLC, No. 25-2910, the Third Circuit considered a federal civil-rights pleading about a New Jersey tax certificate foreclosure. The proposed amended complaint had not alleged a completed property sale, so the panel found the surplus-equity theory asserted there at best premature, citing Pung. The property was reportedly sold to a third party during the appeal. The panel expressly left open a properly pleaded post-sale claim in a new action or through an appropriate motion to reopen. The opinion does not settle the merits of such a claim or erase the distinct no-sale compensation issue in Ivy.
What should an owner, heir, or lienholder do?
- Identify the transaction. Obtain the tax certificate, foreclosure complaint, docket, notices, and any final judgment. Confirm whether the house itself has been scheduled for a sheriff sale or has already sold.
- Check the date and posture. A pre-July 10, 2024 final judgment raises different issues from a pending case under Chapter 39. Do not assume a later statute reopens an old judgment.
- Preserve the sale option promptly. In an ordinary pending case, the owner or heirs should address the written demand to the Superior Court before final judgment. The precise filing and service should be checked against the docket and applicable rules. Redemption may be possible until the right is barred, but the amount and timing must be verified.
- Examine abandonment and notice. Request the factual basis and certification for an abandoned-property designation, and compare every required notice with the actual owner, heirs, and addresses.
- After a sale, trace the funds. Obtain the sheriff’s sale report, final accounting, deposit information, and a current title/lien search before estimating any amount payable to the former owner. Challenge a demonstrably unfair sale through the appropriate timely procedure, supported by evidence.
These questions are time sensitive. A tax foreclosure lawyer can review the docket, calculate redemption, assess a timely sale request, and evaluate any surplus or taking claim. Contact Fazzio Law Offices to discuss the facts of a New Jersey property tax foreclosure.
This article is general information as of September 25, 2026, not advice for a particular property or a guarantee of an outcome. Pending legislation and later decisions may change the analysis.
