Settlement of Federal Takings Lawsuit Filed by VLA Against Village of Orleans

Federal takings lawsuit filed by Vermont Legal Aid settles with Village of Orleans agreeing to return client’s home assessed at nearly $80,000 that was purchased at tax sale for only $6,550

PRESS RELEASE – June 17, 2024

Flynn v. Town of Barton and Village of Orleans, a federal case filed by Vermont Legal Aid, Inc. (VLA) alleging that Plaintiff Penny Flynn’s home was unconstitutionally taken via tax sale without just compensation, has settled with the Village of Orleans (the Village) agreeing to return the property to Ms. Flynn and pay her attorney’s fees and court costs. The lawsuit followed the U.S. Supreme Court’s 2023 decision in Tyler v. Hennepin County, unanimously holding that a local government violated the Takings Clause of the U.S. Constitution when it took and sold a taxypayer’s property that was worth substantially more than the unpaid taxes for which it was taken.

Ms. Flynn is a 66-year-old Vermonter living on Social Security Retirement benefits who unwittingly lost the home to the Village through a tax sale for only $6,550 of unpaid taxes, utilities, and fees. The Village and the Town of Barton, where the property is located, assess the property at nearly $80,000. VLA filed the lawsuit on Ms. Flynn’s behalf claiming the low-bid tax sale resulted in Ms. Flynn’s loss of significant equity in the home and violated the Takings, Excessive Fines, and Due Process Clauses of the U.S. Constitution, as well as the Vermont Constitution and common law.

In addition to representing Ms. Flynn in this case, VLA advocated for reforms to the property tax sale laws in the legislature this session. The effort culminated in Act 106 which was signed into law by Governor Phil Scott on May 13, 2024, and went into effect immediately. Among other critical protections for homeowners, the law now requires municipalities to consider homeowner’s financial circumstances and offer them a “written reasonable repayment plan” prior to initiating a tax sale for delinquent taxes.

“We are thrilled that Ms. Flynn will be getting her property back and the financial security that it represents for her and her family. Moving forward, we are hopeful that municipalities will make every effort to avoid conducting tax sales for small amounts of debt by offering affordable repayment plans, as now required by law, and utilizing tax collection methods that don’t result in loss of housing and the home equity that represents many moderate and low income Vermonters’ most valuable asset,” said Attorney Greg Fox, who represented Ms. Flynn in the lawsuit. “This case should put cities and towns on notice that taking taxpayer’s equity via tax sale comes with significant legal risk,” added Attorney Grace Pazdan, Director of VLA’s Homeowner Legal Assistance Project and co-counsel on the case.

In addition to enacting some immediate improvements to the abatement and tax sale process, Act 106 creates a stakeholder working group tasked, in part, with offering recommendations on “whether the State should change the law to allow a delinquent taxpayer whose property is transferred [via tax sale process] to recoup all or part of the equity in the taxpayer’s property in excess of the tax debt, fees, and interest for which the taxpayer’s property is sold.” VLA is a member of the working group and will continue to advocate for legislative action to correct the injustice of the current process, which allows for the taking of home equity without just compensation in addition to loss of affordable housing for low-income, disabled, and older homeowners.

The Case is Flynn v. Town of Barton et al., Case No. 2:24-cv-0076 (D. Vt.)

For press inquiries, please contact Greg Fox, Vermont Legal Aid, gfox@vtlegalaid.org, (802) 223-6377 or Grace Pazdan, Vermont Legal Aid, gpazdan@vtlegalaid.org, (802) 223-6377.