Pushback: A resolution to abolish home equity theft


Published: 11-16-2022 4:52 PM

Tonight, the Greenfield City Council may take the first step towards ending an unconstitutional state law that has come to be known as “home equity theft.”

Massachusetts is one of only 13 states that allows home equity theft. In Alabama, Arizona, Colorado, Illinois, Maine, Massachusetts, Minnesota, New Jersey, New York, Nebraska, North Dakota, Oregon and South Dakota, governments not only keep the value of unpaid property taxes and interest from the sale of a seized home — they also keep the surplus equity rather than returning it to the property owner. When a homeowner owes a tax debt, the local government can force a foreclosure and keep the full selling price of the home —leaving the homeowner with nothing.

In 2020, the Michigan Supreme Court ruled that Michigan’s General Property Tax Act was “unconstitutional as applied to former property owners whose properties were sold at a tax-foreclosure sale for more than the amount owed in unpaid taxes, interest, penalties, and fees related to the forfeiture, foreclosure, and sale of their properties.” The plaintiffs, who owed a mere $8.41 in taxes, argued that the county had taken their property without just compensation, in violation of the Takings Clauses of the United States and Michigan Constitutions. Seven months ago, the Governor of Wisconsin signed a law that forbids localities from taking more than they are owed in property tax foreclosure sales. Montana also repealed its home equity theft law.

In Massachusetts, according to research by the California-based Pacific Legal Foundation, “Violating the Spirit of America: Home Equity Theft in Massachusetts,” 254 Massachusetts homeowners lost a collective $60 million in home equity between January 2014 and June 2020 when municipalities foreclosed and sold their homes over tax debts as small as $2,004.

The Pacific Legal Foundation filed a lawsuit in 2021 in Bristol County Superior Court representing two brothers, who lost $250,000 in equity to the town of Easton, charging the plaintiffs suffered “uncompensated taking of their private property, and excessive fines, and violation of their due process rights.” The Foundation argues that the brothers “have a right to be free from uncompensated takings of private property under the Fifth Amendment of the U.S. Constitution; “a right to be free from the imposition of excessive fines,” under the Eighth Amendment; “a right to adequate notice before being deprived of their property” under the Fifth Amendment; and “a right to be free from unequal taxation” under Part 1, Article 10 of the Massachusetts Declaration of Rights.

Greenfield homeowners Mitch Speight and Joan Marie Jackson have been leading the effort to protect home equity anywhere in our state. The Greenfield Ways & Means Committee has been reviewing this issue for more than three months. Under a resolution drafted by City Councilor Katherine Golub, the full council may vote this evening on the following resolution: “That the Greenfield City Council resolves to urge the Massachusetts General Court to Pass H. 3053, An Act Relative to Tax Deeds, as filed in the 192nd Session. The Act amends Section 53 of Chapter 60 so that upon issuance of an order on the taking of title and an order of public sale of a foreclosed property, the land court shall also order a public sale of the foreclosed property and order distribution of proceeds consistent with the provisions of M.G.L. Chapter 183 §. 21, §. 24-27 inclusive, treating the tax title holder like a mortgagee with the first priority interest in proceeds from the property, and treating the delinquent debtor as a mortgagor.”

H. 3053, as filed by State Rep. Jeffrey Roy (D-Franklin), requires cities and towns trying to collect a property tax debt to be treated like a mortgagee [bank], entitled to “all sums then secured…including all costs, charges or expenses incurred or sustained collecting” the tax debt, and the property owner [the mortgagor] receives “the surplus, if any,” after the city has been made whole. Passing Golub’s resolution is a key first step in preserving property owners’ right to just compensation for the taking of their property.

On Oct. 3, the General Court dumped H. 3053 into a study order with 50 other bills. It will now have to be refiled in January. Send this column to your Selectboard or City Council, urging them to pass a similar resolution. Ask state Sen. Jo Comerford,  state Reps. Natalie Blais and Susannah Whipps, to cosponsor the refiling of H. 3053 to abolish home equity theft in Massachusetts, and to pass it onto Governor-elect Maura Healey for her signature.

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Al Norman’s Pushback column appears every third Wednesday of the month. If you wish to submit comments, email him at: info@sprawl-busters.com.