Background
EHF-INDIANA4 owned a 121-unit Warrick County apartment complex serving low-income, elderly, and disabled tenants through government housing-assistance programs. After about $45,279 in property taxes, assessments, penalties, and costs went unpaid, the county began Indiana’s statutory tax-sale process. M&M Investment Group bought the tax-sale certificate for $182,123 in October 2022. The property was not redeemed during the one-year redemption period, and M&M petitioned for a tax deed.
EHF objected, contending among other things that the sale notices were inadequate and that transferring the property threatened its tenants. It also asserted that giving it only the sale surplus—rather than the property’s asserted fair-market value of between $3.3 million and $6.5 million—would be an unconstitutional taking and an excessive fine. After a bench trial, the Warrick Circuit Court found the statutory requirements and notice satisfied, ordered issuance of the deed, and rejected the constitutional claims. EHF later obtained the remaining surplus sale proceeds and appealed only the constitutional issues, abandoning its notice and housing-equity arguments.
While the appeal was pending, the U.S. Supreme Court decided Pung v. Isabella County. Pung held that, when a tax-sale procedure is historically fair, auction price—not hypothetical fair-market value—is the baseline for just compensation. A former owner is entitled to the amount generated above the tax debt, but not to the difference between the auction price and an appraisal. The Indiana Court of Appeals ordered supplemental briefing on how that decision affected EHF’s appeal.
The Court’s Holding
The Court of Appeals affirmed in a published opinion by Judge Leanna Weissmann. Assuming without deciding that the private tax-certificate purchaser could be treated as a state actor, the court held that Pung foreclosed both federal constitutional theories. EHF had petitioned for and received the surplus proceeds from the $182,123 sale. That was the compensation Pung required; EHF could not use the apartment complex’s appraised value to demand millions more.
The panel recognized Pung‘s qualification that auction price controls when the sale is fairly conducted in light of the country’s tax-sale history. But EHF did not preserve such a challenge. It expressly abandoned its inadequate-notice argument on appeal, and its supplemental brief offered only a one-sentence assertion that Indiana law lacks safeguards designed to maximize proceeds. The court would not recast that assertion as a preserved challenge to the fairness of the sale process.
The excessive-fines claim failed for the same reason. EHF calculated the alleged penalty by subtracting the tax debt from the property’s appraised value, precisely the fair-market-value approach Pung rejected under both the Fifth and Eighth Amendments. EHF also presented its Indiana constitutional claims as coextensive with the federal claims. Because it supplied no separate analysis under Article 1, Sections 21 and 16 of the Indiana Constitution, the panel deemed any distinct state-constitutional theory waived.
Key Takeaways
- For a fairly conducted Indiana tax sale, the auction price is the baseline for measuring compensation; an owner who receives the sale surplus generally cannot recover additional value based on an appraisal.
- A party seeking to invoke Pung‘s fairness qualification must preserve and develop a challenge to the tax-sale procedure. Abandoned notice arguments and a conclusory supplemental assertion will not suffice.
- Indiana constitutional claims need independent briefing when a litigant seeks protection beyond the federal baseline. Treating state and federal provisions as identical can waive a distinct state-law argument.
Why It Matters
This decision gives Indiana tax-sale participants an early, direct application of Pung. Certificate purchasers, counties, lenders, and delinquent owners now have clear appellate guidance that the gap between a property’s auction price and appraised market value does not itself establish a taking or excessive fine when the owner can recover the statutory surplus. That matters especially where a modest delinquency affects high-value property: the size of the apparent lost equity, standing alone, does not change the constitutional measure.
The opinion also identifies where future disputes are likely to move. Practitioners representing owners should investigate notice, bidding procedures, redemption rights, and other process-based objections early, preserve them in the trial court, and brief them squarely on appeal. They should also analyze Indiana’s Constitution separately if they contend it offers broader protection. For purchasers and local officials, the ruling reinforces the importance of strict compliance with Indiana Code chapters 6-1.1-24 and 6-1.1-25, because a properly preserved challenge to whether a sale was fairly conducted remains conceptually different from the valuation theory rejected here.