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Senate votes to prohibit seizing home equity in municipal tax-taking cases

The amendment to the budget adds momentum to a years-long effort to end a practice critics call “home equity theft”

Massachusetts allows local governments to take not only the taxes they are owed (plus interest and fees) but also the rest of the equity in properties. This house in Greenfield was taken with all its equity from an owner delinquent on taxes.Matthew Cavanaugh/For The Boston Globe

The state Senate on Thursday unanimously passed an amendment to its annual spending plan that would prohibit municipalities from taking all of the equity homeowners have in their property in tax-taking cases.

Critics of a practice they call “home equity theft” hailed the vote as a major step forward in a years-long effort to protect the equity homeowners have in property taken from them due to delinquent property taxes.

“For far too long my constituents, and homeowners across Massachusetts, have been robbed of their rightful equity,” Senator Mark Montigny said in a statement.

Montigny, who began drafting legislation to eliminate the loss of home equity in 2018, cited two recent court decisions for adding momentum to the effort to end “home equity theft.”


Last year, a unanimous US Supreme Court said municipal and county governments may only recover the taxes owed, and not seize the remaining equity in a foreclosed property.

And last month, Judge Michael K. Callan of Hampden Superior Court cited last year’s Supreme Court decision (Tyler v. Hennepin County, Minn.) in ruling that an attempted taking was unconstitutional. That blocked the City of Springfield from taking about $123,000 in equity from a delinquent homeowner.

Those two cases “brought new hope that this thievery would finally come to an end,” Montigny said. “The Senate has taken the lead on ending this injustice in Massachusetts.”

Massachusetts is one of a dwindling number of states that allow local governments to take not only the taxes they are owed (plus interest and fees) but also the rest of the equity in properties.

Since the Supreme Court decision last year, nine states have outlawed the practice and Senate action “brings Massachusetts one step closer to finally resolving the predatory and unconstitutional practice,” Montigny said.

Most often, the home equity cases involve people who have inherited real estate and own it without a mortgage but can’t pay the taxes. In some instances, municipalities keep hundreds of thousands of dollars when the amount owed in taxes is a small fraction of that.


In the Springfield case, for example, the homeowner’s tax debt was about $22,000, on property worth about $145,000. After taking the property for non-payment of taxes the city wanted to keep the entire $145,000.

In Tyler, the Supreme Court ruled a tax-taking by a county in Minnesota violated the Fifth Amendment’s prohibition against the government taking private property “without just compensation.”

Callan, in his ruling, said the state law used by municipalities in tax-takings, known as Chapter 60, “in its present form, is untenable and requires legislative correction.”

Adam Chapdelaine, executive director of the Massachusetts Municipal Association, which lobbies on behalf of towns and cities, said in a statement: “We have been partnering with the Legislature to find a legislative solution to this issue that clarifies practices under state law and aligns with the recent Supreme Court decision.”

The House has a bill in its Ways and Means committee that is similar to the amendment passed by the Senate. When House and Senate representatives eventually meet in the joint conference committee to reconcile differences in their respective budget plans the Senate home equity amendment may be adopted without changes, modified, or dropped, without a full vote of the House.

“This is a major step forward,” said Al Norman, a retired Beacon Hill lobbyist who took up the cause when one of his Greenfield neighbors faced the total loss of equity in a tax-taking case.


The amendment, if it becomes law, besides prohibiting the taking of equity, would also mandate that delinquent homeowners receive written notice in easy-to-understand language about their outstanding tax debt, how to settle it, and the consequences for failing to do so, Montigny said.

The Senate amendment would also cut in half the current 16 percent interest rate applied to tax debts, double the time homeowners have to settle their debt, and allow municipalities to waive accrued interest to make debt repayment plans easier to complete, Montigny said.

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