Two months ago, an elderly homeowner in Maplewood, New Jersey, burned down her 18th century home, which she had lived in for 60 years, rather than let an investor acquire it from the township for back taxes. The elder went to the basement and stabbed herself four times. A state prosecutor later claimed the woman, who survived, said she would only give up her home “over my dead body.”

Under New Jersey law, this elder’s home, valued at $700,000, was auctioned for delinquent taxes, and purchased by a private investor for $175,000. The elder stood to lose $600,000 in equity for a $100,000 tax debt.

In New Jersey, lien holders must wait two years, but if taxes paid have not “redeemed” the house, investors can foreclose and keep all the equity. A lawyer from the Pacific Legal Foundation who tracks such cases nationwide, told The New York Times: “Government thinks it can take a windfall at the expense of society’s most vulnerable people, and either keep it for the public purse, or give it away to private investors for their enrichment. Either way, it’s gross.”

Mitch Speight and Joan Marie Jackson of Greenfield know this story. In 2022, they received a Notice to Quit from a lawyer representing the City of Greenfield, requesting them to vacate their home, “or I will go to the Greenfield Housing Court and seek permission to evict you.”

Greenfield’s tax collector began the process to take title to the home Mitch and Joan owned free and clear of a mortgage. The city could sell their house at auction, and seize their entire equity in the home. Mitch and Joan owed $55,735 in taxes and collection costs. If the city sold their house for its assessed value of $275,100, the couple would have lost $219,365 in equity. Instead, Mitch and Joan paid off every penny due.

The Greenfield City Council voted unanimously on Nov. 16, 2022 to urge lawmakers to change state law to prohibit municipalities from taking home equity in excess of debt. The mayor of Greenfield wrote a letter urging repeal of home equity theft. State Sen. Jo Comerford agreed to be the lead sponsor for Senate legislation in the 2023 session to end home equity theft. State Sen. Paul Mark signed on, and state Representatives Natalie Blais and Susannah Whipps also pledged to sign onto House legislation.

Mitch and Joan have approached officials in other towns for support. Activists in Amherst were told by the tax collector: “The Town of Amherst historically has never sold any properties or had anyone evicted from their home. We encourage anyone who may be struggling with payments to reach out to us.” Amherst puts a lien on the home, and “once the lien is recorded with the Registry of Deeds, it is valid until the debt is paid in full.”

In the biggest news yet, the U.S. Supreme Court agreed in January to hear the case of a 94-year old elderly widow in Minnesota, who owed $15,000 in back taxes/fees, when Hennepin County seized her condo, sold it for $40,000, and kept the $25,000 in excess equity. The Pacific Legal Foundation filed a similar lawsuit in 2021 in Massachusetts against the town of Easton.

Mitch and Joan explained their rights in a My Turn column last June in the Recorder: “Under the Fifth Amendment to the U.S. Constitution, we have a right to be free from uncompensated taking of private property, and to adequate notice before being deprived of our property. Under the Eighth Amendment, we have a right to be free from excessive fines.” Under Part 1, Article 10 of the Massachusetts Constitution Declaration of Rights, Mitch and Joan are protected from a taking of property without “reasonable compensation.”

According to Joshua Polk, Pacific Legal Foundation attorney, the petitioner’s Supreme Court brief will be filed by Feb. 27, with arguments on April 26, and a decision as early as the end of June. If the Supreme Court rules that home equity theft is unconstitutional, our state law will have to be repealed. Between January of 2014 and June of 2020, homeowners in Massachusetts lost a collective $60 million in home equity. “We’re not done in Massachusetts,” Polk told The Boston Globe in 2021. “Not until this law is declared unconstitutional and stricken from the books.”

The people who have suffered most from this equity theft have been elderly homeowners who have paid off their mortgage. “Real estate investors,” the elder in Maplewood wrote, “have aggressively and ruthlessly pursued foreclosure of my property, so they can flip it.”

Al Norman’s Pushback column appears every 3rd Wednesday of the month. His most recent book is Ravings: American Wild Talk. Comments can be emailed to info@sprawl-busters.com.

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