WAUKESHA, Wis., April 25, 2025 -- The law firms of Zimmer & Rens LLC and Milberg Coleman Bryson Phillips Grossman, PLLC have filed a class action lawsuit on behalf of Wisconsin residents who have undergone substantial financial injustices due to unconstitutional property tax foreclosure practices written into Wisconsin statute.
Several individuals have brought claims against the State of Wisconsin, all 72 of its counties, and the City of Milwaukee, seeking to recover surplus funds unlawfully retained by the State and local governments, generated by the sale of tax-foreclosed properties.
Legal Background
For decades, Wisconsin counties - and the City of Milwaukee - were required by Chapter 75 of the Wisconsin Statutes to retain surplus funds from tax foreclosure sales at the expense of equity-holding property owners. When a property was foreclosed due to unpaid taxes and consequently sold by the government, any funds from the sale exceeding the amount owed were retained by the government.
The lawsuit alleges these surplus funds belonged to the property-owner(s).
In 2023, the United States Supreme Court held this precise kind of practice is unconstitutional. In Tyler v. Hennepin County, 598 U.S. 631 (2023), the Court found that surplus proceeds from tax foreclosure sales belong to the foreclosed owner, who is entitled to just compensation under the Fifth and Fourteenth Constitutional Amendments.
Around the same time, Wisconsin enacted 2021 Wisconsin Act 216, requiring local governments to return surplus proceeds from future tax foreclosure sales to the original foreclosed taxpayers. However, this correction of the state statutes – which went into effect on April 2, 2022 – came too late for many former Wisconsin property owners and their descendants, whose funds remain seized without recourse.
According to the lawsuit, these surplus proceeds constitute hundreds of millions of dollars unconstitutionally taken from Wisconsin property owners and improperly retained for years, dating back as far as January 1, 1989.
In Wisconsin, the creditor in any type of foreclosure case – mortgage foreclosure, contactor lien foreclosure, or judgment lien foreclosure – is entitled only to an amount sufficient to pay off the outstanding balance of the debt, plus costs associated with the foreclosure and sale.
The lawsuit contends Wisconsin's prior tax foreclosure laws allowed the state and its political subdivisions to profit millions of dollars from a practice that is illegal for any other creditor.
Impacted Victims
Several individuals have come forward, seeking to represent everyone who has suffered from these unconstitutional takings. These individuals include:
Mr. John Elliott & Mrs. Darlene Elliott: John and Darlene Elliott lost their Wisconsin property after amassing less than $5,000 in delinquent property taxes. While the Elliotts faced severe financial strain from accumulating medical bills, the county sold their property, generating more than $25,000 profit for the government. The Elliotts were unaware that this investment property of theirs had been foreclosed and sold at auction; they were unable to recover their surplus funds under the former Wisconsin statutes.
Mr. Steven Skarban: Steven Skarban's 72-acre Wisconsin family farm was foreclosed upon over a tax debt of less than $3,000. The county sold the property for $420,500, retaining more than $415,000 in profit for the government, while forcing Mr. Skarban's family to vacate the property.
Countless other Wisconsin property owners are believed to have faced similar harm.
As reported in the Green Bay Press Gazette, on September 7, 2016, Oconto County sold 31 acres of lakefront property in the Town of Brazeau, generating a $720,000 profit for the County.
Recourse: Class Action Filed
The lawsuit is currently pending in the Eastern District of Wisconsin federal court in Milwaukee, case number 2:25-cv-00421-SCD, before Magistrate Judge Stephen C. Dries.
As reported in the Superior Telegram and by Yahoo! News, a representative of Douglas County has stated that that the lawsuit could cost one county alone "millions of dollars" in damages unless the State of Wisconsin "steps up."
The Plaintiffs and class are represented by Paul Zimmer and Taylor Rens of Zimmer & Rens LLC and Leland Belew, Adam Edwards, and Mitchell Breit of Milberg Coleman Bryson Phillips Grossman, PLLC.
People who believe they may have a recovery claim are encouraged to inquire for more information.
Media Inquiries
Paul Zimmer: paul.zimmer@zrlawyers.com, 414-240-7320
Leland Belew: lbelew@milberg.com, 312-224-8685
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