Amicus Curiae Brief — Chelsea Koetter, Petitioner v. Manistee County Treasurer, et al.

No. 24-1095

In the

Supreme Court of the United States

CHELSEA KOETTER,

Petitioner,

v.

MANISTEE COUNTY TREASURER, et al.,

Respondents.

On Petition for a Writ of Certiorari

to the Court of A ppeals of Michigan

BRIEF OF AMICI CURIAE,

LEGAL SERVICES OF THE HUDSON

VALLEY, LEGAL SERVICES OF LONG

ISLAND, AND PETER M. SOARES

IN SUPPORT OF PETITIONER

Michael Wigutow

Legal Services

of Long Island

Helen Keller Way,

5th Floor

Hempstead, NY 11550

Peter M. Soares

New York, NY

Tanya P. Dwyer

Counsel of Record

Richard Menaker

Daniel McEnroe

Legal Services of

the Hudson Valley

One Park Place, Suite 202

Peekskill, NY 10566

(914) 368-2489

tdwyer@lshv.org

Counsel for Amici Curiae

120383

A

(800) 274-3321 • (800) 359-6859

i

TABLE OF CONTENTS

Page

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . i

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . iii

IDENTITY AND INTEREST OF AMICI CURIAE . . 1

SUMMARY OF THE ARGUMENT . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

I.

Post-Tyler procedures governing claims for

surplus equity, such as those in Michigan

and New York, deny just compensation

by failing to provide due process to

homeowners who lose their homes . . . . . . . . . . . . 4

II. N e w Yo r k ’ s a m e n d e d i n r e m

foreclosure procedures do not assure

just compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 8

III. Client stories show how recover y of

surplus equity is impeded by lack of

procedural due process . . . . . . . . . . . . . . . . . . . . 14

A. Examples of local surplus procedures . . . . 15

B. New York’s surplus claims proceedings

cause grave harms when lack of due

process and self-dealing deprive

homeowners of their right to just

compensation . . . . . . . . . . . . . . . . . . . . . . . . . 15

ii

Table of Contents

Page

1.

Client Stories 1 and 2 –

Orange County . . . . . . . . . . . . . . . . . . . 16

2. Client Story 3 – Cattaraugus

County . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3. Client Story 4 – Sullivan County

from police station proceeding to

threats to call Sheriff . . . . . . . . . . . . . . 18

C. Tax Districts collect millions of dollars

annually from tax foreclosures, but

less than 17% of former homeowners

claim their compensation . . . . . . . . . . . . . . 18

IV. Certain New York localities provide a

model for achieving recovery of surplus

equity: the mandate of Tyler can be

readily achieved . . . . . . . . . . . . . . . . . . . . . . . . . . 20

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

iii

TABLE OF CITED AUTHORITIES

Page

CASES:

Cherokee Nation v. Southern Kansas Ry. Co.,

135 U.S. 641 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Crozier v. Krupp, A.G,

224 U.S. 290 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

First English Evangelical Lutheran Church v.

Los Angeles County,

482 U.S. 304 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 14

Gardner v. Vill. of Newburgh,

2 Johns. Ch. 162 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Grandinetti v. Metro. Transp. Auth.,

74 N.Y.2d 785, 543 N.E.2d 737 (1989) . . . . . . . . . . . . 13

Horne v. Department of Agriculture,

576 U.S. 350 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

In re Houghton & Olmstead Avenues in City of

New York,

266 N.Y. 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

In the Matter of the Foreclosure of Tax Liens by

Proceedings in Rem pursuant to Article 11

of the RPTL by Cattaraugus County, List of

Delinquent Taxes for 2022,

92728, Cnty. Court of the State of NY, Cnty. of

Cattaraugus, (June 7, 2024) . . . . . . . . . . . . . . . . . . . . 17

iv

Cited Authorities

Page

James Square Assocs. LP v. Mullen,

21 N.Y.3d 233 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Knick v. Township of Scott, Pennsylvania,

588 U.S. 180 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9

Lucas v. S.C. Coastal Council,

505 U.S. 1003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Manocherian v. Lenox Hill Hosp.,

84 N.Y.2d 385, 643 N.E.2d 479 (1994) . . . . . . . . . . . . 11

Matthews v. Eldridge,

424 U.S. 319 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 13

Mennonite Board of Missions v. Adams,

459 U.S. 903 (1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Mullane v. Central Hanover Bank & Trust Co.,

339 U.S. 306 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 14

Nelson v. City of New York,

352 U.S. 103 (1956) . . . . . . . . . . . . . . . . . . . . 3, 9, 10, 22

Rent Stabilization Ass’n of New York City, Inc. v.

Higgins,

83 N.Y.2d 156 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Tyler v. Hennepin County,

598 U.S. 631 (2023) . . . . . . . 2-5, 8-10, 12, 14, 18, 20, 22

v

Cited Authorities

Page

United States v. Clarke,

445 U.S. 253 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

United States v. Lawton,

110 U.S. 146 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

United States v. Taylor,

104 U.S. 216 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Utter v. Richmond,

112 N.Y. 610 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Walker v. City of Hutchinson, Kan.,

352 U.S. 112 (1956) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

STATUTES AND OTHER AUTHORITIES:

U.S. Const. amend. V . . . . . . . . . . . . . . . . . . . 2, 3, 8, 10, 14

U.S. Const. amend. XIV . . . . . . . . . . . . . . . . . . . . . 2, 3, 10

6 P. Nichols, Eminent Domain § 25.41

(3d rev. ed. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Instructions to Claim Surplus Monies Action

(In Rem Foreclosures), Sullivan County

Treasurer (n.d.), accessed Apr. 12, 2025, available

at https://www.sullivanny.gov/sites/default/

files/departments/ treasurer/Claim%20Form

%20Packet_3.pdf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

vi

Cited Authorities

Page

N.Y. Abandoned Property Law . . . . . . . . . . . . . . . . . . . 20

N.Y. Em. Dom. Proc. Law § 303 (McKinney) . . . . . . . . 12

N.Y. Em. Dom. Proc. Law § 503 (McKinney) . . . . . . . . 12

Newburgh City Charter, Art. VIII, § C13,

https://ecode360.com/10870386#10870386 . . . . . . . . 16

N-PCL § 1608 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL Article 11 . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 5-7, 11

RPTL § 1135 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

RPTL § 1136 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

RPTL § 1136(2)(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

RPTL §§ 1195-1197 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1195(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1195(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1196(1)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1196(1)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1196(3)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

vii

Cited Authorities

Page

RPTL § 1196(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

RPTL § 1197 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1197(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1197(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

RPTL § 1197(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

RPTL § 1197(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

SFY 2023-24 Annual Report of the Office of

Unclaimed Funds, OFFICE OF THE NEW

YORK STATE COMPTROLLER (n.d.),

accessed Apr. 12, 2025, available at https://www.

osc.ny.gov/files/unclaimed-funds/resources/

pdf/annual-report-sfy-2023-24.pdf . . . . . . . . . . . . . . 21

Sup. Ct. R. 37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Sup. Ct. R. 37.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Sup. Ct. R. 37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1

IDENTITY AND INTEREST OF AMICI CURIAE

Pursuant to Supreme Court Rule 37, Legal Services

of the Hudson Valley, Legal Services of Long Island,

and Peter Michael Soares respectfully submit this brief

amicus curiae in support of Petitioner Chelsea Koetter.1

Legal Services of the Hudson Valley (“LSHV”) is a

non-profit law firm providing free civil legal services to

individuals in the seven counties of the Hudson Valley

in the State of New York. LSHV is the only provider of

foreclosure prevention services in six of the seven counties

in the Hudson Valley. LSHV has a distinct interest in

the outcome of this case, as it will impact Hudson Valley

homeowners’ property rights.

Legal Services of Long Island (“LSLI”) is a nonprofit law office providing free counsel, advice, and legal

representation on Long Island, New York. LSLI was

among the first Legal Services Corporation programs in

the state and is one of the largest providers of free civil

legal assistance in New York. The LSLI Foreclosure

Prevention Unit has a distinct interest in the outcome of

this case.

Peter M. Soares is a pro bono volunteer with the

Foreclosure Prevention Unit at LSHV. He has provided

1. Pursuant to Rule 37.2, all parties listed on the docket

were given a ten-day notice that this brief would be filed on May

21, 2025. Pursuant to Rule 37.6, Amici Curiae affirm that no

counsel for any party authored this brief in whole or in part, and

no counsel or party made a monetary contribution intended to fund

the preparation or submission of this brief. No person other than

Amici Curiae made a monetary contribution to its preparation

or submission.

2

free legal services to indigent New Yorkers through his

volunteer work with Legal Services NYC, The Legal Aid

Society, and Catholic Charities Community Services.

SUMMARY OF THE ARGUMENT

The Constitution requires government to provide

just compensation and due process in the taking of a

homeowner’s property. Under this Court’s decision in

Tyler v. Hennepin County, 598 U.S. 631, such a taking

occurs when local government forecloses on a tax lien

against a homeowner resulting in surplus equity. The

Fifth and Fourteenth Amendments direct the taxing

authorities to ensure that the former homeowners subject

to a tax foreclosure are justly compensated when there is

a surplus. Since Tyler was decided, state legislatures and

local governments across the country have issued updated

regulations responding to this clarification of the law of

takings. In some states, however, those new regulations

have obstructed the ability of the foreclosed homeowners

to recover surplus equity. Here, the Petitioner appeals

from procedures in Michigan that continue to deny

recovery because they fail to provide due process. The

undersigned Amici from New York support Petitioner

Chelsea Koetter because a similar failure of due process

is occurring in our state, resulting in the unconstitutional

taking of surplus equity by local government without just

compensation.

The brief emphasizes the following points. First, we

show that the failures to provide due process are not unique

to Michigan. The New York Legislature amended the Real

Property Tax Law (RPTL) Article 11, adding several

sections governing surplus funds. These amendments

3

provide no clear process for the former homeowner to be

notified that she is entitled to just compensation from a

resulting surplus equity, or for the process she must follow

to receive her just compensation.

Second, we show that the constitutional duty of the

taxing authority to return surplus equity includes a duty to

comply with constitutional due process. Both requirements

originate in the Fifth Amendment and are applied to the

States through the Fourteenth Amendment. History and

tradition conjoin just compensation and due process in our

fundamental law. The decision of the Court in Nelson v.

City of New York, 352 U.S. 103, does not hold otherwise.

While some courts have, without analysis, effectively

held that any established process should suffice, only

due process that is designed to ensure just compensation

satisfies the Constitutional requirement when there is a

taking.

Third, we share client stories and some surplus claims

statistics that New York’s post-Tyler legislation does

not meet the requirements of due process. Taxpayers

are confronted with just compensation procedures that

materially differ from county to county; New York

mandates state-wide due process for other types of

seizure. New York’s legislation covers several types of just

compensation procedures as well as procedures to claim

surplus after a non-tax foreclosure. Some are calculated

to provide the former owners with a fair and reasonable

opportunity to receive the constitutionally required

compensation, e.g., the State Comptroller’s abandoned

funds application process and the State’s Eminent Domain

Procedures Law. The NY Real Property Tax Law surplus

claims procedures is a web of traps for the unwary.

4

Fourth, we highlight claims procedures from eminent

domain law, conventional mortgage foreclosures and

private tax lien foreclosures, all of which assure that the

property owner loses no more than what the creditor

has the right to receive. Indeed, in a few New York

localities, the procedures for private lien foreclosures are

well-structured to facilitate the foreclosed homeowner’s

recovery of surplus equity. This demonstrates that just

compensation as required by Tyler can be achieved in New

York by adopting due process legislation like that required

for Eminent Domain, mortgage and private tax lien law.

Anything less is contrary to due process law in New York.

ARGUMENT

I.

Post-Tyler procedures governing claims for surplus

equity, such as those in Michigan and New York,

deny just compensation by failing to provide due

process to homeowners who lose their homes.

In her petition for certiorari, Petitioner has shown

that the surplus claims procedure enacted in Michigan in

response to Tyler creates barriers that disproportionately

affect vulnerable populations, including the elderly and

low-income individuals. Any misstep by a financially

distressed property owner leads to loss of the surplus

equity. Under the guise of providing adequate claim

procedures, Michigan local government ends up taking the

surplus proceeds itself. The same unconstitutional regime

now exists in New York, with a few important exceptions.

After Tyler came down, the New York Legislature

amended the State’s tax foreclosure statute to provide the

foreclosed homeowner with a purported pathway to obtain

the surplus. But the amended provisions do not provide

5

for adequate notice, contrary to the requirements of due

process, and leave room for local governments to add

further and different obstacles that channel the surplus

equity to the taxing authority itself while preventing the

foreclosed homeowners from receiving just compensation.

Local Cities, Towns, Villages (“Tax Districts”),

enforce tax liens in New York through a tax foreclosure

process. Though many of these Tax Districts use the

provisions set forth in Article 11 of the New York State

Real Property Tax Law (“RPTL”), several Tax Districts

opted out of Article 11 and continued to use pre-existing

tax foreclosure schemes. Two years ago, this Court held

that Tax Districts could not “confiscate more property

than was due. By doing so, they effected a ‘classic taking

in which the government directly appropriates private

property for its own use.’ [citation omitted].” Tyler v.

Hennepin County, 598 U.S. at, 639. In 2024, New York

amended the RPTL ostensibly to align the Article 11

provisions with Tyler.

RPTL §1135, Application for Surplus, was added

to allow, in lieu of filing an answer to the foreclosure

proceeding, “any person claiming surplus arising from a

tax district’s enforcement of delinquent property taxes…”

to file a written notice of claim “with the clerk in whose

office the report of sale is filed at any time before the

confirmation of the report of sale…stating the nature and

extent of their claim and the address of the claimant or the

claimant’s attorney.” RPTL §1136(2)(d) was amended to

“direct the enforcing officer of the tax district to prepare

and execute a deed conveying title [leaving the former

homeowner] barred and forever foreclosed of all such

right, title…”

6

Title 6, Distribution of Surplus, was added to Article

11 (RPTL §§1195-1197). The former homeowner is “a

person or persons who lost title to and/or ownership of

the residential property due to a tax foreclosure.” RPTL

§1195(1). Surplus is defined as “the net gain… realized by

the tax district upon the sale of tax-foreclosed property”

over and above the amount of the lien and related

expenses. RPTL §1195(3). The amount of the surplus,

whether obtained from a public sale, private sale, or

because “the tax district intends to retain tax-foreclosed

property for a public use…” is then established under the

terms of RPTL §1196(1)(a), (b). RPTL §1197 establishes

that “[a]ny person who had any right, title, interest,

claim, lien or equity of redemption…immediately prior

to the issuance of a judgment of foreclosure may file a

claim with the court having jurisdiction for a share of

any surplus resulting from the sale of such property”,

which claim “shall be administered and adjudicated”

by the court, RPTL§1197(1). If the former homeowner

has not filed a claim for the surplus within three years,

unless the court directs otherwise, the tax foreclosure

proceeding is concluded, with the surplus funds “deemed

abandoned but shall be paid to the tax district, not to the

state comptroller, and shall be used by the tax district to

reduce its tax levy.” RPTL §1197(4) & (5).

Although Article 11 provides for a public auction,

similar to a conventional mortgage foreclosure, as the

default for disposing of the property of a defaulting

homeowner, local jurisdictions may instead hold a private

sale, transfer the property to a local landbank under the

State’s not-for-profit corporation law (N-PCL § 1608), or

retain the property for its own use. The availability of

these options further exposes the foreclosed homeowner

7

to the likelihood that the surplus equity will be retained

by the tax district. All four methods are available to local

authorities, and some use a combination of two or more

methods depending on local ordinances and the perceived

condition of the foreclosed property.

Where the new RPTL provisions have been adopted,

recovery of the surplus equity is in no way assured. Under

amended Article 11, the enforcing officer who “determines

that a surplus is attributable to the sale shall submit a

report to the court…demonstrating how the amount of

the surplus was determined.” RPTL §1196(3)(b). “Within

ten days…, the enforcing officer shall notify the former

property owner that a surplus was attributable to the

sale…, that such surplus has been paid into court and

that the court will notify the interested parties of the

procedure to be followed in order to make a claim for a

share of the surplus.” Id. “Upon approval by the court of

the enforcing officer’s report, the tax district shall have

no further responsibilities in relation to the parcel or

any surplus attributable thereto, except to the extent the

court directs otherwise…” RPTL §1196(4). Thus, under

New York’s amended laws governing tax foreclosure

surpluses, the Tax District is automatically relieved of any

obligation to ensure that the former homeowner is justly

compensated. The amended laws provide no explanation of

what notice the court is to provide the former homeowner,

or where, or how that taxpayer is to make a claim.

Thus, New York’s amended laws governing the

process for claiming the surplus lacks clear guidance on

how the former homeowner is notified of her right to just

compensation, or any details for the claims process if she

happens to learn of the surplus. The law absolves the

8

Tax District of any responsibilities to justly compensate,

ending its involvement after the issuance of a report

that provides the amount of the surplus. In short, New

York’s amendment of its in rem foreclosure statute is not

calculated to satisfy the just compensation mandate of

Tyler.

Moreover, the multiple ways Tax Districts may elect

to enforce their tax liens add another layer of uncertainty,

even confusion, that interferes with enabling the post tax

foreclosure claim process to accomplish just compensation

of the foreclosed homeowner. (See Section II below for

examples.) Each of these procedures, individually or in

combination, “imposes an unjustifiable burden on takings

plaintiffs….” Knick v. Township of Scott, Pennsylvania,

588 U.S. 180.

II. New York’s amended in rem foreclosure procedures

do not assure just compensation.

The Fifth Amendment’s Due Process and Takings

Clauses have remained closely intertwined in this Court’s

just compensation jurisprudence for more than a century.

As noted in Tyler, the Court issued two important decisions,

United States v. Taylor, 104 U.S. 216 and United States

v. Lawton, 110 U.S. 146, establishing that the seizure of

surplus equity constituted a taking that required just

compensation. Shortly thereafter, in Cherokee Nation

v. Southern Kansas Ry. Co., 135 U.S. 641, the Court

sustained a federal statute granting eminent domain

rights to a private railroad company, noting nevertheless

that the dispossessed property owner was “entitled to

reasonable, certain and adequate provision for obtaining

compensation” under the Constitution, achieved in that

9

instance by a defined statutory process for an assessment

of the value. Similarly, in Crozier v. Krupp, A.G, 224 U.S.

290, in circumstances where the taking occurred prior to

payment, the Court required that “adequate means be

provided for a reasonably just and prompt ascertainment

and payment of the compensation.” In other words, what

was required was not a theoretical path to compensation

but a demonstrated “means” to enable “just and prompt

ascertainment and payment.” More recent cases such as

Lucas v. S.C. Coastal Council, 505 U.S. 1003 and Knick

v. Twp. of Scott, 588 U.S. 180, have similarly noted the

close relationship between due process and takings,

holding that taxing authorities cannot create procedural

barriers to just compensation. Indeed, in emphasizing the

“self-executing character of the constitutional provision

with respect to compensation.” First English Evangelical

Lutheran Church v. Los Angeles County, 482 U.S. 304,

quoting United States v. Clarke, 445 U. S. 253, and 6 P.

Nichols, Eminent Domain § 25.41 (3d rev. ed.1972), the

Court has underscored the need for taxing authorities to

take the initiative through procedures that assure just

compensation of dispossessed owners.

Significantly, the Court in Tyler rejected Hennepin

County’s argument that the holdings in cases like Taylor

and Lawton were superseded in Nelson, which had

sustained the City’s retention of surplus equity following

a in rem foreclosure. Tyler found Nelson distinguishable

from the case before it in which there was “no opportunity

for the taxpayer to recover excess value,” contrasting it

with the compensation procedure of the City that the

owner had repeatedly (by implication, knowingly) avoided.

598 U.S. at 642. It should be emphasized, however, that

Nelson does not purport to define what in all instances

10

constitutes the due process necessary to render a local

compensation procedure compliant with the requirements

of the Fifth and Fourteenth Amendments, and Tyler itself

does not address that important issue. As decisions such

as Cherokee Nation and Crozier make clear, the mere

existence of some minimal compensation procedure is not

enough— it must be due process, i.e., “adequate means

. . . for a reasonably just and prompt ascertainment and

payment of the compensation.”

While the court in Mennonite Board of Missions v.

Adams, 459 U.S. 903 reaffirmed that Nelson’s mail notice

of the initial foreclosure was valid process, it does not

mean that any process should be considered due process

under the Matthews test. The court should not extend

the main holding of Nelson, which was that a notice sent

by mail to the primary address of the property owner

was sufficient. Even the court in Nelson emphasized that

it was the provision of notice that made the deprivation

constitutional. This court has held that it “cannot be

disputed that due process requires that an owner

whose property is taken for public use must be given a

hearing in determining just compensation.” Walker v.

City of Hutchinson, Kan., 352 U.S. 112. This Court has

consistently found that the state must provide notice that

is reasonably calculated to inform parties of proceeding

that may directly impact their rights. Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306; Mennonite, id.

New York’s approach to notice, in which each local

municipality determines their own procedures, frequently

results in a lack of actual notice about the available

surplus. As a result of these local procedures, foreclosed

homeowners will either be deterred from applying for a

surplus or even being aware that one exists. The localities

11

then benefit from the “abandoned” property, seizing it

again to pad municipal budgets.

New York’s failure to provide adequate due process in

reclaiming a surplus, much like Michigan’s, is especially

telling when made in comparison to how takings have

typically occurred in New York. The state of New

York has long recognized the necessity of providing

compensation for government taking property. Gardner

v. Vill. of Newburgh, 2 Johns.Ch. 162. New York courts

have historically found that compensation is a necessary

condition for a taking and that a failure to provide

adequate process to acquire compensation would be

invalid Rent Stabilization Ass’n of New York City, Inc.

v. Higgins, 83 N.Y.2d 156; Manocherian v. Lenox Hill

Hosp., 84 N.Y.2d 385.

State courts have recently held due process is related

to a takings. James Square Assocs. LP v. Mullen, 21

N.Y.3d 233. Article 11’s onerous requirement that the

owners of foreclosed properties must track down and

serve all other interested parties (despite the fact that

they had notice from the initial in rem proceeding) in

order to initiate a surplus claim is invalid. In the realm

of eminent domain, the government must service notice

of the condemnation on all interested parties. The state

must also offer an award to the former owner which they

may choose to accept. If the former owner declines the

state’s offer, they may then bring their own claim for

compensation. Notably a condemnee needs only serve the

state entity with their notice of claim.

There is a three-year statute of limitation for making

a claim which also applies for inverse condemnation in

which a property owner claims that a government act

12

constitutes a taking mandating compensation. Even if

there are lien holders on the property in a condemnation

case, a lien on condemned property becomes a lien on the

award from condemned property and is not extinguished

by the condemnation. Utter v. Richmond, 112 N.Y. 610; In

re Houghton & Olmstead Avenues in City of New York,

266 N.Y. 26. Further, this court recently held in Tyler

v. Hennepin County that the surplus equity from a tax

foreclosure sale is a distinct property right conferred onto

the holder of the equity of redemption. A comparison with

the tax foreclosure process reveals the clear due process

violations by the state of New York.

While with both proceedings all interested parties

are noticed of the imminent taking and given the option to

claim compensation, significant difference remain. First,

a condemnation proceeding requires an affirmative offer

of just compensation at the start of the proceeding N.Y.

Em. Dom. Proc. Law § 303 (McKinney). By comparison,

in a tax foreclosure the tax jurisdiction is under no

affirmative duty to timely inform interested parties of

the availability of the surplus or even notify them of the

sale itself. Further, in a condemnation case the claimant

is under no obligation to notify other interested parties

even as lienholders have a right to compensation as a lien

on the surplus rather than something to be affirmatively

claimed. N.Y. Em. Dom. Proc. Law § 503 (McKinney).

In a tax foreclosure however, the state requires former

homeowners, many of whom are elderly or disabled and

unlikely to be able to afford an attorney, to notice all

possible interested parties of the potential surplus. That

said parties would already be noticed of the underlying tax

foreclosure and thus have had the opportunity to appear

and claim the surplus already makes any state interest

13

in protecting the rights of lienholders or absent property

owners basically moot. Finally, the surplus can be lost

entirely if the former homeowner, due to ignorance or

inaction, fails to timely move to recover it. While there

is a deadline for claimants to file a claim or appear, it “is

merely a procedural direction to be issued by the court

in the exercise of its broad discretion to administer the

litigation in an orderly and expeditious manner. As such,

the court may extend the time fixed by its own prior

order ‘upon such terms as may be just and upon good

cause shown’.” Grandinetti v. Metro. Transp. Auth., 74

N.Y.2d 785.

In mortgage foreclosure proceedings, the proceeding

most analogous to a tax foreclosure, the court appoints

a referee to execute the sale and said referee must issue

a report of sale, noticing the property owner and other

interested parties of the availability of the surplus. A

property owner will be given notice of the amount of the

surplus available as well as simple instructions for how

they may claim it. Even in the rare instance in which a

surplus goes unclaimed, such as where there are unknown

heirs to an estate, the funds are deposited with the State

Comptroller for safekeeping until it may be claimed.

A simple application of the Matthews v. Eldridge,

424 U.S. 319 test would hold due process is not met

by existing tax foreclosure surplus procedures. First,

both Michigan and New York, have devised a scheme

to reclaim the private property interest at issue – the

surplus in foreclosed property. The surplus is usually vital

to relocation efforts of the former homeowner, impacting

future housing stability and health. Second, the present

procedures create a substantial risk of deprivation because

14

in many cases property owners do not receive notice that

is reasonably calculated to inform homeowners of surplus

proceedings that may directly deprive them of their right

to Just Compensation. Mullane, id. Third, the deprivation

may be easily mitigated by creating simple procedures to

notice homeowners of the surplus and inform them what

they must do to claim it. Finally, there is minimal burden

to the government from additional safeguards as it will

just require an additional notice sent out to the former

owners. Lienholders would not need additional notice

regarding the surplus since they already receive notice of

the foreclosure petition, akin to other types of foreclosure

proceedings.

III. Client stories show how recovery of surplus equity

is impeded by lack of procedural due process.

Since the RPTL was amended to comply with Tyler,

many local governments have implemented statutory

amendments creating bar r iers to the foreclosed

homeowner’s ability to recover surplus. These procedures

occasionally require efforts no laymen could be expected

to achieve from indigent or distressed foreclosed

homeowners. This clearly violates the principle that

there is a “self-executing obligation to actually pay just

compensation under the 5th Amendment.” First English

Evangelical, 482 U.S. 304. In some instances, those

procedures allow lienholders subordinate to the taxing

local government’s lien to seize the surplus with none of

the constraints imposed on the homeowners, effectively

ignoring the primacy of the homeowner’s right to the

surplus under Tyler. The following cases and statistics

exemplify the current takings regime in New York’s local

governments.

15

A.

Examples of local surplus procedures

In Cattaragus County, the former homeowner has

the burden of serving notice of surplus proceedings on

all former lienholders, regardless the liens validity or

enforceability. The delays and expense are unnecessary

when all interested parties have already been served

with the notice of the foreclosure and either defaulted or

appeared.

In Sullivan county, former homeowners are required

to submit eight different forms to claim their surplus.

These forms are rife with legalese and contain waivers

of rights (such as a concession the auction was valid and

the amount of surplus is correct) that an unsophisticated

former homeowner is unlikely to understand. By

comparison New York’s Eminent Domain Procedures

Law requires the government to affirmatively make

efforts to find the condemnee and offer just compensation

immediately – this is a statewide requirement that cannot

be diminished by local law.

B. New York’s surplus claims proceedings cause

grave harms when lack of due process and selfdealing deprive homeowners of their right to

just compensation

The illusion of due process in New York’s surplus

proceedings often causes grave, irreparable harm. In

rem foreclosures push elderly and disabled homeowners

into extreme poverty, requiring reliance on government

benefits for relocation, despite the wealth accumulated in

their homes.

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The New York Legislature established insufficient

procedures for in rem tax foreclosure surplus claims and

left the details to local enforcing officers across the state.

If a claims procedure that meets due process standards

was included in the RPTL, then homeowners would be

able to claim funds easily and relocate without becoming

housing insecure.

1.

Client Stories 1 and 2 – Orange County

Ne w bu r gh , i n O r a ng e C ou nt y, e v ic t e d ou r

septuagenarian client after taking her deed. Like the

Michigan high court, the Sothern District of New York

determined that Newburgh’s policy to evict a homeowner

without compensation was not a taking because Newburgh

had not yet benefited from the taking. Newburgh’s tax

collection procedures require former homeowners to be

evicted, have the home boarded up and winterized, then

assess all carrying costs to the delinquent tax account.

Newburgh City Charter, Art. VIII, § C13. Found at https://

ecode360.com/10870386#10870386. Our client had all her

faculties last fall when she was evicted. Small illnesses

snowballed after she became homeless. She died several

weeks ago after being homeless for seven months. Her

family struggled to get her into hospice care in her final

weeks because Medicaid analysts determined that she

still owned the home, and all the equity in it, because

Newburgh did not recorded its deed. Our client’s family

offered to make Newburgh whole for the delinquent taxes,

fines and fees but the City Counsel repeatedly refused

to accept payment in full. The City of Newburgh had not

sold her house as of April 2025. Our client was entitled

to compensation or injunctive relief at the time the deed

was transferred to Newburgh. Delayed compensation has

caused immediate, predictable and irreparable harm.

17

In contrast, the neighboring city of Middletown does a

non-judicial foreclosure wherein they sell tax liens for $10.

Those tax liens are converted into redeemable tax deeds

by operation of law. If the City fails to notify a homeowner

about the non-judicial tax foreclosure, then the homeowner

has an additional year to redeem the property.

Each tax district has its own labyrinth of hurdles to

deprive homeowners of due process and just compensation,

allowing said districts to private interests after the claims

period ends.

2.

Client Story 3 – Cattaraugus County

Homeowners in Cattaraugus County, New York must

meet confusing requirements to claim their funds. One

former homeowner held fee simple interest in his property.

He filed a claim for ~$12,000 after his home was sold

at public auction pursuant to an in rem tax foreclosure

judgment, which extinguished all property liens. The

municipality required the prior owner to serve all former

interested parties with a notice of claim. The court insisted

the surplus be set aside for a judgement creditor who failed

to appear in court and defaulted on the foreclosure and

the notice of claim. The extinguished lien’s validity was

not examined but surplus funds were set aside for it. This

county is forcing former homeowners to find their creditors

and set aside funds for defaulting creditors without

examining the validity and enforceability of the claims.

In the Matter of the Foreclosure of Tax Liens by

Proceedings in Rem pursuant to Article 11 of the RPTL

by Cattaraugus County, List of Delinquent Taxes for

2022, 92728, Cnty. Court of the State of NY, Cnty. of

Cattaraugus, (June 7, 2024).

18

3.

Client Story 4 – Sullivan County from

police station proceeding to threats to call

Sheriff.

Livingston Manor in Sullivan County does public

auctions to the highest bidder. Before Tyler they had an

incentive to find the highest bidder because they retained

the surplus. Immediately after the Tyler decision, the

Sullivan tax assessor insisted our client wait a year and

a half to request a surplus so Sullivan County could use

the surplus proceeds in the next budget cycle. Sullivan

County presently allows homeowners to request Surplus

funds through court forms that implicitly waive the right

to challenge the validity of the auction, the auction amount

or invalid liens. Instructions to Claim Surplus Monies

Action (In Rem Foreclosures), Sullivan County Treasurer

(n.d.), accessed Apr. 12, 2025, available at https://www.

sullivanny.gov/sites/default/files/departments/treasurer/

Claim%20Form%20Packet_ 3.pdf. If Sullivan acts

affirmatively to give former homeowners actual notice

then they might be able to claim the funds within three

years. However, our clients wish to challenge the validity

of the auction and the assumed market value. This may

take longer than three years so there is a risk that the

surplus proceeds will be returned to the Sullivan County

fisk before the dispute is resolved.

C.

Tax Districts collect millions of dollars

annually from tax foreclosures, but less

than 17% of former homeowners claim their

compensation.

Tax-foreclosure surplus funds are largely uncollected

by New York’s former homeowners. Seven New York

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counties provided tax-foreclosure surplus information

for this brief: Nassau, Erie, Sullivan, Ulster, Franklin,

Cayuga, and Chemung. 562 surpluses were reported,

totaling $27,420,225.82. Nassau County distributed 3 of

34 surpluses, or 8.8%. Erie County distributed 26 of 159

surpluses, or 16.70%. Sullivan County distributed 8 of 82

surpluses, or 9.70%. These rates show that New York’s

prior homeowners, like those in Michigan, are mostly

failing to secure their surplus funds.

In the few cases where prior homeowners obtain

their funds, such funds often face financial erosion due

to legal and administrative fees. Many prior homeowners

retain lawyers who charge a percentage of the surplus

in exchange for surplus-recovery services. An elderly

LSLI client was billed a third of her $125,000 surplus in

exchange for such services. In Erie County, a Referee

received $1,300 from a surplus distribution regarding a

surplus valued at $86,875.67. These instances show that

most prior homeowners are not collecting their surplus

funds, and those who are successful may incur substantial

fees and costs.

New York faces a wild-west scenario where its counties

create surplus-recovery frameworks that effectively

deprive most prior homeowners of their property. Taxforeclosure surplus recovery rates need not be as low as

8.8% in New York, nor 5% in Michigan. With appropriate

guidance from this Court, every party will be able to

receive its surplus funds with due process.

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IV. Certain New York localities provide a model for

achieving recovery of surplus equity: the mandate

of Tyler can be readily achieved.

New York’s Abandoned Property Laws, Eminent

Domain Procedures Law, and Westchester’s mortgage

surplus procedures have a brightline for due process.

This is not true in the tax surplus context, and it deprives

former homeowners of the right to just compensation when

they are facing eviction.

The former owner experienced the taking and so is

entitled to due process for the right of equity redemption

and the right to just compensation. Thus, the former

homeowner should not have to file a motion in any court

for the payment of these funds, the government should

affirmatively offer payment to the former homeowner. In

New York State, there are straight-forward, user-friendly

procedures for individuals to claim property held by the

government. See NY Abandoned Property Law (“NY

APL.”) (requiring surplus funds, bank accounts, etc.

to be transferred to the New York Comptroller’s Office

of Unclaimed Funds after three years of inactivity);

NY Eminent Domain Procedure Law (“NY EDPL”)

(requiring the government to seek out property owners

and make an affirmative offer of just compensation before

condemning property).

The New York Comptroller makes the abandoned

property claims process simple. Anyone may visit the

Comptroller’s website and enter personal information to

find out if funds are being held in their name. Claimants

have an unlimited amount of time to make a claim by

proving their identity, without costs or fees. Lienholders

who may have had a claim to the abandoned funds may

not claim the funds once they are placed with the Office

21

of Unclaimed Funds. The process is simple enough not

to require an attorney or broker. In 2024, 85% of claims

for previously unclaimed and abandoned property were

paid through an online process; $1.5 million was paid to

claimants each business day. SFY 2023-24 Annual Report

of the Office of Unclaimed Funds, OFFICE OF THE NEW

YORK STATE COMPTROLLER (n.d.), accessed Apr. 12,

2025, available at https://www.osc.ny.gov/files/unclaimedfunds/resources/pdf/annual-report-sfy-2023-24.pdf. Tax

districts could employ similar procedures since they

know before commencing the tax foreclosure whose

property is being seized to satisfy the tax lien, and who

is entitled to the surplus post foreclosure judgment, as

just compensation. Instead of returning the surpluss to

the tax jurisdiction after three years, the RPTL should

require that the funds be deemed “abandoned” so that

former homeowners may claim it.

Just compensation would become a reality for former

homeowners if a similar brightline existed in the RPTL.

Due process here would ideally follow three steps. First,

a final judgment granting a tax foreclosure directs the

conveyance of the deed from the homeowner to the

local government to satisfy the tax lien. This transfer

extinguishes ownership of the real estate and all liens

on the property. See RPTL §§1136, 1197(10). Second, the

surplus funds are directed to be deposited with the County

Treasurer, for the sole benefit of the former homeowner.

Third, the government has an affirmative duty to pay the

former homeowner just compensation before eviction, i.e.,

the surplus. See Horne v. Department of Agriculture,

576 U.S. 350. Due process requires the municipality to

simply and directly notify the former homeowner it is

holding funds for her, to collect as just compensation. If the

funds are not collected from the county treasurer within

22

three years, then they may be claimed through the NY

Comptroller’s Office at any time thereafter.

New York must establish a tax surplus procedure that:

(1) is not time bound, (2); ensures just compensation can

immediately be claimed by the former homeowner; and (3)

is actually available before an eviction can be commenced

against her and anytime thereafter.

CONCLUSION

This Court should grant Chelsea Koetter’s petition

for certiorari and reconcile Nelson’s dicta with Tyler’s

findings so former homeowners in New York and Michigan

may claim their just compensation with due process.

Respectfully submitted,

Michael Wigutow

Legal Services

of Long Island

Helen Keller Way,

5th Floor

Hempstead, NY 11550

Peter M. Soares

New York, NY

Tanya P. Dwyer

Counsel of Record

Richard Menaker

Daniel McEnroe

Legal Services of

the Hudson Valley

One Park Place, Suite 202

Peekskill, NY 10566

(914) 368-2489

tdwyer@lshv.org

Counsel for Amici Curiae

Dated: May 21, 2025