The lower courts ruled in accordance with long-standing state laws, the best available precedents (which weren't that good because - amazingly, but that's why it ended up at the Supreme Court - this exact question had never come up before), and the simple fact that under Minnesota law Tyler did not own the property at the time of sale so had no claim to the proceeds of the sale. The federal courts' reluctance to overrule state governments in the absence of any relevant precedent or guidance from SCOTUS for doing so was likely also a factor. This is judicial restraint, not a problem.

As a historical note, Brown vs Topeka BoE, Heller and other second amendment rulings and and most other constitutional interpretation cases have followed the same trajectory: state law challenged in federal court, federal district and circuit courts uphold the state law on the basis of reasonable interpretation of existing precedent, appeal to Supreme Court, Supreme Court issues new rules or clarifies existing rules This is how it is supposed to work - generally we do not want the lower courts to be inventing new constitutional theories out of thin air.