Month: July 2026

Supreme Court reaffirms longstanding rules governing tax sales

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Sometimes my reaction to a court decision, even a Supreme Court decision, is just a sense of relief that the Court has reaffirmed that the law is what you have always thought it to be. The United States Supreme Court’s recent decision in Estate of Pung v. Isabella County is just that kind of decision. 

While the specific facts of the case contain exactly the kind of bad facts and stubborn behavior that sometimes lead Courts to fashion equitable remedies that really muddy the playing field, the Court focused on bare procedure and historical precedent to arrive at their result essentially affirming 100 years of legal procedure, but leaving the door open to the lower courts to judge the particulars concerning due process.

Scott Pung owned and occupied the home that was the subject of the case, before passing away in 2004. Several years after his death, the tax assessor for Isabella County declined to continue taxing the Pung home as a primary residence because the estate (or its heirs) did not follow proper procedure (as the assessor saw it) to file an affidavit establishing that the heir living in the property still qualified for the partial tax exemption.

The Pung estate successfully challenged the assessor’s decision for the tax years 2007-2011 before a Michigan state tax tribunal.  Despite Pung’s victory, the assessor apparently persisted in her position and denied the partial tax exemption for the 2012 assessment year.[1] The Pungs apparently failed to timely contest the tax assessor’s decision to deny the partial tax exemption again in 2012.

While the Pungs paid the 2012 tax bill assessing the home as a primary residence, but refused to pay the supplemental tax bill of $2,241.93.[2]  The County began proceedings to collect the unpaid tax through sale of the property. While there may be some question as the sufficiency of notices, the Pungs ultimately did not pay the tax, redeem the property, or otherwise take action to stop the sale. The home sold at public auction to a third party for $76,008.00. The appraised tax value of the property was approximately $195,000. 

The Pungs filed suit claiming that the tax sale did not realize the fair market value of the property. [3]  The Pungs asserted that the 5th and 8th Amendments required the state to compensate them for the fair market value if it wished to take their property to meet their tax sale. Astonishingly, the Pungs argued that the County, and by extension any government entity conducting a public sale, must make up the difference between the realized tax sale price at the auction and the fair market value of the property under ideal sale conditions. To put it more clearly, the Pungs argued that the County must pay them the roughly $120,000 dollars difference in what the tax sale actually yielded and what the Pungs asserted was the true value of the property. Essentially, they argued the County should pay them $120,000 for the privilege of collecting their $2,000 deficient tax liability.  

The Court unanimously rejected the Pung’s argument on both constitutional grounds. Citing the fact that the right of the state to liquidate property to pay tax debts dates back to colonial days and perhaps Magna Carta, the Court did not find anything compelling about the Pung’s arguments. 

While a tax sale may inevitably be a distressed sale in most real estate markets, the Court reasoned that the Pungs and any taxpayer has an opportunity to avoid such an outcome. With significant equity in the property, the Court noted that the Pungs could have borrowed money to redeem the property by paying the tax and that they alternately had ample time to market it themselves for a fair price.  

The Pungs may still have an opportunity upon remand to contest whether the County’s procedure was properly carried out and whether its actions were fair under the context of the previous litigation between the parties. But SC dirt lawyers and anxious title underwriters can rest easy knowing that what they understood was the rule forever will remain the rule going forward. Sometimes that’s a pretty good result.  

[1] Justice Thomas’s concurring opinion stated that the County’s advocate could offer no explanation for why the Assessor persisted in denying the partial exemption after the Tribunals reversal as to the prior tax years, but it apparently stemmed from the Pungs continued refusal to submit an affidavit establishing primary residency.

[2] Whether you consider the Pungs apparent refusal to submit the affidavit of residency to the assessor or pay the assessed tax over the next two years to be strongly principled or head-scratchingly foolish might depend on your readings of the facts.

[3] It is the rare foreclosure or distress sale that returns fair market value of a sale conducted under ideal conditions. There are as we know a more limited pool of bidders and title problems associated with these kinds of sales.

Cybersecurity Threats and Their Impact on Real Estate Transactions

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Imagine arriving at your real estate closing only to learn that the county’s property records are unavailable. If the documents can’t be recorded, then the transaction may be left hanging in the air. Depending on lender funding requirements, the closing attorney may not be able to disburse the funds, and the buyer may not be able to receive their keys until recording is available. It sounds far-fetched, but it’s exactly the type of disruption that recent cyber-attacks on county governments have made possible.

Most people never think about their county recording office until they’re buying or selling real estate. Deeds, mortgages, easements, plats, liens, and other documents are quietly recorded every day, creating the public record that establishes who owns property and what interests affect it. It’s a system that has worked for generations because it relies on one simple principle: the public records must be accurate, complete, and accessible.

Recent events in South Carolina serve as a reminder that this system is more fragile than many people realize.

A recent cyber attack disrupted access to property records and other county services, temporarily preventing normal operations. While the details of the investigation continue to emerge, the incident highlights just how dependent modern real estate transactions have become on digital access to public records. Unfortunately, this is not an isolated event. Several South Carolina counties have experienced technology failures, ransomware attacks, or other disruptions in recent years.

Cyber security, however, is only one challenge facing county recording offices.

Many counties across the state operate with limited budgets and skeleton crews. Employees often process hundreds of documents each day while balancing increasing demands and aging technology. Even the most dedicated public servants can struggle when resources are stretched thin. Under staffing and insufficient training increase the likelihood of recording errors, indexing mistakes, or delays in processing documents – all of which can create headaches for property owners years later.

The integrity of the public record is essential because virtually every real estate transaction depends on it.

Before issuing title insurance, conducting a closing, or approving a mortgage loan, attorneys and title professionals examine the public records to confirm ownership and identify any issues affecting the property. They are looking for deeds that properly transferred title, unreleased mortgages, judgments, tax liens, easements, restrictive covenants, and countless other matters that could affect ownership rights.

If those records are unavailable because of a cyber attack, the transaction may be delayed. Buyers may not be able to close on schedule. Sellers may miss contractual deadlines. Lenders may refuse to fund loans until title can be verified. Even a short interruption can create significant inconvenience for everyone involved.

More concerning are situations where records have been altered, corrupted, or improperly indexed. The public recording system functions because people can trust that what they find is complete and accurate. Preserving that trust requires not only secure computer systems but also adequate staffing, proper training, and ongoing investment in the offices that maintain these records.

Although county governments bear much of the responsibility for protecting these systems, cybercriminals often gain access through surprisingly simple methods.

Many cybersecurity incidents begin not with sophisticated hacking tools but with social engineering. Rather than attacking computers directly, criminals manipulate people into providing passwords, opening malicious attachments, or clicking fraudulent links. These phishing emails are designed to look legitimate and frequently impersonate trusted organizations, coworkers, financial institutions, or government agencies.

While this blog focuses on real estate law, cyber attacks and scams aren’t limited to real estate transactions. Anyone, not just government employees, can become a target. A few simple precautions can dramatically reduce the risk of becoming a victim. Be cautious of unexpected emails requesting urgent action. Verify unusual requests through a separate phone call or trusted contact information rather than responding directly to the email. Avoid opening attachments or clicking links unless you are confident they are legitimate. Enable multi-factor authentication (“MFA”) whenever possible, and keep software updated to address known security vulnerabilities.

These habits protect more than your personal information. They help protect the institutions that communities depend upon every day.

County recording offices rarely make headlines when everything is working properly. Yet they perform one of the most important functions in our legal system by preserving the history of property ownership and ensuring that buyers, sellers, lenders, and attorneys can rely on the public record.

As counties continue modernizing their technology, cybersecurity must remain a priority. At the same time, we should not overlook the importance of investing in the people responsible for maintaining these records. Secure systems, well-trained staff, and accurate public records are not simply administrative conveniences: they are essential to protecting property rights and keeping South Carolina’s real estate market functioning smoothly.