The Supreme Court’s decision in Tyler v. Hennepin County arose from a property tax foreclosure. Its influence may extend well beyond delinquent taxes.
In BBLI Edison, LLC v. City of Chicago, No. 25-1713 (7th Cir. July 22, 2026), the Seventh Circuit considered whether Chicago may require the purchaser of a foreclosed apartment building to pay $10,600 to each tenant who declines to enter a new lease. The court upheld the ordinance under existing landlord-tenant precedent. Its opinion nevertheless contains an unusually direct acknowledgment that the Supreme Court has been expanding the circumstances in which government action may implicate the Takings Clause.
The opinion may prove more important for the question it leaves unresolved than for its immediate result: When does a government-mandated transfer of money tied to ownership of particular real estate become a taking rather than ordinary economic regulation?
Link to Chicago’s Keep Chicago Renting Ordinance Chicago’s Keep Chicago Renting Ordinance
Chicago adopted the current version of its Keep Chicago Renting Ordinance in 2021. The ordinance applies when a person acquires residential rental property through foreclosure.
The new owner must negotiate in good faith with existing tenants for new leases lasting at least 12 months. A tenant who does not sign a new lease may demand a $10,600 relocation-assistance payment from the owner. The ordinance does not require the tenant to document moving expenses, place the money toward a security deposit, or otherwise demonstrate that the payment was used for relocation.
BBLI Edison acquired a building at 5200 North Sheridan Road through a sheriff’s deed in February 2024. More than 220 tenants occupied the building. At least five declined new leases and requested the relocation payment.
BBLI sued the City under 42 U.S.C. § 1983. It alleged that the ordinance caused a physical taking, a regulatory taking under Penn Central Transportation Co. v. City of New York, and an unconstitutional condition or land-use exaction. The district court dismissed the complaint, BBLI declined an opportunity to amend, and the Seventh Circuit affirmed.
Link to Money Can Be Property Under the Takings Clause Money Can Be Property Under the Takings Clause
The Seventh Circuit began from a premise that has become increasingly significant. The Takings Clause protects more than land.
In Horne v. Department of Agriculture, 576 U.S. 350 (2015), the Supreme Court held that the government physically took personal property when it required raisin growers to transfer a portion of their crop. In Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), the Court held that a regulation granting union organizers temporary access to private agricultural property caused a per se physical taking.
And in Tyler v. Hennepin County, 598 U.S. 631 (2023), the Court held that a county could not retain the value of tax-foreclosed property exceeding the taxpayer’s debt.
Hennepin County sold Geraldine Tyler’s condominium for $40,000 to satisfy approximately $15,000 in taxes, interest, and penalties. It kept the remaining $25,000. The Supreme Court unanimously concluded that Tyler retained a protected property interest in that surplus. The government could collect the debt it was owed, but it could not use the debt as a basis to confiscate additional value.
The Court returned to the subject in Pung v. Isabella County, 609 U.S. ___ (2026). Pung held that compensation following a fairly conducted tax sale is generally measured by the auction proceeds remaining after payment of the tax debt, rather than by the property’s hypothetical fair-market value. Although Pung limited the amount recoverable, it reaffirmed Tyler’s central rule: the government must return the surplus generated by a tax sale.
Against that background, BBLI argued that Chicago was commanding the relinquishment of money connected to specific real property. The ordinance did not impose a generally applicable tax. It required the owner of an identified foreclosed building to transfer a fixed sum to an identified tenant because of the owner’s acquisition and operation of that property.
The Seventh Circuit acknowledged that the argument “has something to it.”
Link to The Tension Between Koontz and the Landlord-Tenant Cases The Tension Between Koontz and the Landlord-Tenant Cases
BBLI relied heavily on Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013). There, the Supreme Court explained that a demand for money may fall within the Takings Clause when it directs the owner of a particular parcel to make a payment burdening the ownership of that land.
Read broadly, Koontz supports BBLI. Chicago’s ordinance directs owners of particular properties, recently foreclosed residential buildings, to make specific payments to tenants.
The Seventh Circuit declined to extend Koontz that far. Koontz involved a permitting process in which the government conditioned its approval of a proposed development on the owner surrendering property or paying for improvements elsewhere. Chicago did not withhold a permit or another discretionary governmental benefit. The ordinance directly regulated a class of property owners who acquired occupied buildings through foreclosure.
The court instead relied on decisions recognizing broad governmental authority over the landlord-tenant relationship. Yee v. City of Escondido, 503 U.S. 519 (1992), held that rent control could transfer wealth from landlords to tenants without producing a per se taking. FCC v. Florida Power Corp., 480 U.S. 245 (1987), likewise stated that laws regulating the economic relationship between landlords and tenants generally are not per se takings.
The Ninth Circuit reached a similar result in Ballinger v. City of Oakland, 24 F.4th 1287 (9th Cir. 2022), which upheld an Oakland ordinance requiring landlords to make relocation payments to displaced tenants. Chicago’s ordinance is arguably more aggressive because the tenant, rather than the landlord, may trigger the payment by declining the offered lease. The Seventh Circuit found the distinction insufficient to alter the constitutional analysis.
In its view, Chicago had created an indirect and “clunky” form of rent control. A prospective purchaser knows the payment requirement exists and can account for it when deciding whether to acquire the property and what lease terms to offer.
Link to The Seventh Circuit Recognized the Direction of Supreme Court Law The Seventh Circuit Recognized the Direction of Supreme Court Law
The most significant part of the opinion appears after the court explains why Koontz does not control.
“In no way are the trends in the Supreme Court’s recent takings cases lost on us,” the court wrote.
It then identified a sustained line of decisions strengthening the Takings Clause:
Koontz applied the unconstitutional-conditions doctrine to monetary exactions. Horne treated the compelled transfer of personal property as a physical taking. Knick v. Township of Scott, 588 U.S. 180 (2019), allowed property owners to bring federal takings claims under § 1983 without first pursuing state compensation procedures. Cedar Point treated compelled access to land as a taking. Tyler protected surplus value following a tax foreclosure. Sheetz v. County of El Dorado, 601 U.S. 267 (2024), rejected a categorical exemption from takings scrutiny for legislatively imposed permit conditions.
The Seventh Circuit nevertheless concluded that lower courts must follow the Supreme Court’s specific landlord-tenant precedents until the Supreme Court revisits them. The panel applied the law “as it stands,” while recognizing what the law may be becoming.
That discussion gives BBLI a substantial foundation for a petition for certiorari. The Seventh Circuit did not dismiss the owner’s position as frivolous or foreclosed by the basic nature of money. It identified a genuine doctrinal conflict between two lines of Supreme Court authority and concluded that only the Supreme Court could resolve it.
Link to BBLI’s Other Claims Had Problems BBLI’s Other Claims Had Problems
BBLI also asserted a regulatory-taking claim under Penn Central. That claim suffered from the allegations in the complaint.
BBLI did not plead that the payments made operating the building economically infeasible or provide meaningful allegations concerning the ordinance’s financial effect. It also acquired the property after the ordinance became effective. The Seventh Circuit reasoned that a purchaser entering Chicago’s rental market could account for the payment requirement in evaluating the acquisition.
The unconstitutional-conditions claim presented a different problem. Chicago was not using its control over a permit to obtain a concession. It imposed the payment directly by ordinance. The Seventh Circuit viewed the traditional Nollan, Dolan, and Koontz framework as a poor fit.
Even under that framework, the court found a sufficient nexus between the ordinance and Chicago’s interest in preventing displacement. BBLI also failed to allege facts showing that $10,600 was disproportionate to the City’s asserted housing interest.
Those alternative holdings may complicate Supreme Court review. BBLI’s strongest issue is the categorical physical-taking claim, particularly whether a compulsory transfer of money connected to a specific parcel may be insulated from per se review simply because the government places it within a landlord-tenant ordinance.
Link to Could This Reach the Supreme Court? Could This Reach the Supreme Court?
The case has the ingredients of a serious certiorari petition.
The Seventh Circuit expressly recognized the direction of the Supreme Court’s takings cases. The ordinance requires a fixed payment from one private party to another. Liability arises from ownership of specifically regulated real property. The payment is triggered without an individualized permitting process, which places the case near an unresolved boundary left by Koontz and Sheetz.
There are also reasons for caution.
The Seventh and Ninth Circuits have reached the same result, so no direct circuit split presently exists. The Supreme Court denied review in Ballinger in 2022. BBLI also declined an opportunity to amend its complaint, leaving a weak factual record for its regulatory-taking and proportionality theories.
The legal landscape has changed since the denial in Ballinger. The Court decided Tyler in 2023, Sheetz in 2024, and Pung in 2026. Those decisions show continuing interest in government actions that appropriate property, retain surplus value, or impose financial conditions connected to land.
Link to From Property Tax Foreclosures to Mandatory Private Payments From Property Tax Foreclosures to Mandatory Private Payments
BBLI Edison illustrates why Tyler should not be treated as a decision confined to unusual tax foreclosure statutes.
Tyler restored a basic constitutional principle: the government’s lawful authority to collect an obligation does not necessarily permit it to take additional property without compensation. BBLI Edison asks how far that principle reaches when the government does not keep the money itself, but commands its transfer to someone else.
The Seventh Circuit concluded that existing landlord-tenant precedent controlled. At the same time, it recognized that the Supreme Court’s recent cases are pressing in another direction.
That makes BBLI Edison a significant takings decision despite the City’s victory. The opinion preserves a question the Supreme Court may soon need to answer: whether a direct, parcel-linked command to surrender money remains ordinary economic regulation, or whether the modern Takings Clause requires closer scrutiny.