Rice County to use state funding for its portion of statewide settlement

Rice County will utilize state funding to compensate property owners who had their lands seized after a federal ruling last year made the payouts necessary.

A Minnesota law from 1935 required counties that make any profit selling a property seized over unpaid taxes disperse those profits to schools, cities and the county. But the Supreme Court said that isn’t constitutional in May 2023. That decision led to additional litigation and a subsequent statewide settlement funded by the Minnesota Legislature, according to a summary by Goodhue County Attorney Stephen O’Keefe.

The Rice County Board of Commissioners held a special meeting Tuesday after the regular work session when the commissioners agreed to participate in the settlement.

It was discussed in a closed meeting before Rice County Attorney Brian Mortenson and the county auditor were quickly and unanimously approved to handle the payout. Rice County is one of many Minnesota counties that have opted or will opt to use state funds to repay previous stakeholders of approximately 6,000 total parcels of land across the state.

When someone doesn’t pay taxes on a property they own, it can be forfeited and seized by the county. Throughout the last 90 years, counties sometimes sold those properties for more money than was owed on the taxes.

The Supreme Court ruling argues it isn’t constitutional for the government to keep that excess money. As months went by, lawsuits began to stack up against the state’s 87 counties, where people were wanting the money from their forfeited properties that were sold by their respective county or counties.

In response to the class-action lawsuits, the Minnesota Legislature approved $109 million for counties to make those payouts, since the amounts counties would be asked to pay could significantly hurt the county’s budget.

Counties that don’t explicitly opt out are automatically opted in. On Tuesday, Rice County held the special meeting, discussed the litigation in a closed session and approved the agreement after opening the session back up.

No information was shared on which parcels in Rice County were subject to a payout to their previous owners.