GREENFIELD — Activists say a unanimous U.S. Supreme Court ruling Thursday that local government can only retain tax debts owed, and no more, when seizing and selling private property should put an end to so-called “home equity theft.”

Before this ruling, Massachusetts, along with 11 other states, allowed local governments to foreclose on private property when taxes were overdue and keep all the proceeds, even if the taxes owed were a fraction of that amount.

The case the Supreme Court ruled on involved a 94-year-old Minnesota woman who owed $15,000 in back taxes when the county government foreclosed on her condominium. The court ruled that the $25,000 extra that the county collected when the condo was sold violated the Takings Clause of the Fifth Amendment.

The issue has received attention locally, including in Greenfield, where advocates have been pushing city government to stop the practice. In November, the City Council supported a resolution urging the Legislature to reform the Massachusetts tax title taking process. The resolution follows Mayor Roxann Wedegartner’s letter to area legislators, urging them to sign on as co-sponsors of state legislation being refiled.

Sen. Jo Comerford, D-Northampton, has advocated reform of the state law since 2011. Most recently she refiled legislation, S.921, advocating for homeowners in January of this year.

“We remain committed to ridding Massachusetts law of this unfair, and now unconstitutional, practice,” she wrote in a joint statement with Rep. Jeffrey Roy, D-Franklin, and Rep. Tommy Vitolo, D-Brookline.

In the past, Comerford has advocated for the bill with the the Joint Committee on the Judiciary saying that at least 250 homeowners in the state collectively lost $60 million in home equity due to the foreclosure and sale of their homes over tax debts from 2014 to 2020.

Among those who testified before the Joint Committee on the Judiciary to support a bill to reform the current tax title process earlier this month were Greenfield residents Joan Marie Jackson and Mitchell Speight. The couple almost lost all their home equity to the city in recent years.

“This decision is great. I have been looking forward to it. I think it will force all the states that are still participating in egregious theft to repeal their laws,” Speight said Friday.

He noted that the community got involved in raising awareness about the issue.

“I think it was a team effort,” he said. “Once the community was aware of this, everyone got behind it. It started on a local level in Greenfield by exposing the proprietors.”

According to city Treasurer/Collector Kelly Varner, Greenfield has foreclosed on three or four homes in the past decade. She explained since the COVID-19 pandemic began, there have been no court orders to foreclose on properties because of case backups in land court.

Varner said there would be no immediate effect until the state adopts the ruling. She said she was against the ruling because there are existing mortgages and liens on properties that should be paid off before the owners get any money back.

“We allow the property owner plenty of time to sell the property on their own so they can maintain equity,” she explained.

She stressed that there are very few properties that go through foreclosure. When owners get initial notices that they have taxes owed, they have up to a year to pay the debts. After that, a lien is placed on the property. The city will then work with the property owners, who often qualify for state programs, to pay the owed taxes or be put on a three-year payment plan.

In 2023, there were 61 properties in Greenfield listed by the city on April 13 for non-payment of taxes due.

The debts owed ranged from $31 to $8,856. This includes six properties owing less than $100 and 30 of the properties owing more than $1,000.

While Greenfield has few occurrences of what opponents call “home equity theft,” resident Al Norman has been a leading advocate on the issue.

“This is a slam-dunk victory for homeowners,” he wrote in a statement. “We expect the commonwealth to end this unconstitutional theft of home equity, and to amend Chapter 60, Section 53 to stop this confiscatory practice of denying homeowners ‘just compensation’ for their property.”

‘Toehold of the tax debt’

The case that was taken to the Supreme Court, Tyler v. Hennepin County (Minnesota), involved Geraldine Tyler, whose condominium was foreclosed on by county government. She owed $15,000 in back taxes and interest, and the condo sold at auction for $40,000. The court ruled that the $25,000 extra that the state collected violated the Takings Clause of the Fifth Amendment.

“The county had the power to sell Tyler’s home to recover the unpaid property taxes,” Chief Justice John G. Roberts Jr. wrote. “It could not use the toehold of the tax debt to confiscate more property than was due.”

In a concurring opinion, Justice Neil M. Gorsuch argued the Excessive Fines Clause could also be grounds for this decision.

“All the homeowners who in recent months have been listed on town legal notices for back taxes should expect that their excess equity will not be taken from them if their property has to go to sale,” Norman continued in his statement. “We will have to watch closely to see what lawyers say about the ramifications of this unanimous decision today by the Supreme Court.”

Reach Bella Levavi
at 413-930-4579 or
blevavi@recorder.com.

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