Mitch Speight and Joan Marie Jackson bought their Victorian home in Greenfield in 1997. The couple, costume designers for theatrical shows, paid off their mortgage in 2012. But the COVID-19 pandemic put an end to thousands of theatrical performances , and the couple fell behind on their property taxes.
Mitch and Joan’s property is currently valued at $275,100. As of March 17, 2022, Mitch and Joan owe the City of Greenfield $55,728, of which $35,621 is for property taxes/water/sewer, and 36% ($20,107) has been added as interest and legal fees.
On December 29, the couple were served with a “notice to resign” by a city-licensed law firm. “You will have until February 1, 2022 to vacate,” the letter read, “or I will go to Greenfield Housing Court and seek permission to evict you.” But the biggest shock was yet to come.
Massachusetts is one of 12 states that allow a municipality to take “tax title” to a home for back taxes. The city not only recovers the taxes, interest, and legal fees, but gets the full equity in the property. According to a study published by attorney Ralph C. Clifford of the University of Massachusetts Law School at Dartmouth, “the tax collector can execute and register a deed that transfers fee simple title to the real property to the municipality…all of the taxpayer’s interest in the property…is terminated by the foreclosure process. The taxpayer’s title deed is taken by the government without a hearing. Based on an unreviewed decision of a municipal tax collector, the taxpayer immediately loses title to the land…the municipality engages in expropriation without providing reasonable compensation. The value of the property far exceeds the debt owed, allowing the municipality to collect on average almost $50 for every dollar of outstanding property taxes owed. Every year, approximately $56 million is unconstitutionally taken from taxpayers.
This “tax title” process has been described as “home equity theft.” Once the land court issues a judgment barring the owner from the right to “redeem” their property, the city gets the full value of the real estate. The taxpayer has nothing left. By taking tax title to Mitch and Joan’s property, the City of Greenfield gets a property valued at $275,100 for a tax bill of $55,728 – a potential windfall worth five times the amount of taxes owed. Under state law, a taxpayer can be stripped of nearly every aspect of title and possession, except for a right to redeem within one year — if they can lift the funds needed to repay the city. If the tax collector wishes, the taxpayer can be evicted from their home and the city can take “immediate possession” of the property.
A year ago, a law was filed in Beacon Hill to protect homeowner’s equity. Representatives Jeffrey Roy (D-Franklin) and Tommy Vitolo (D-Brookline), told the revenue commission that H. 3053 would prevent municipalities from getting “unfairly” enriched by not paying the taxpayer “the differential between the taxes due and value”. of the property. “It’s unfair for the government to take the full value of someone’s home to settle a small debt,” says Daniel Dew, director of legal policy at the Pacific Legal Foundation. “Most states require that excess funds from these foreclosures be returned to the owner once the debts are settled.” In 2020, the Michigan Supreme Court ordered counties to return excess funds to property owners after debts are paid.
Mitch and Joan hired a lawyer and raised over $55,728 to pay off their debt. If Greenfield had taken title and sold the house for its assessed value, the city would have made a windfall profit of $219,372. All municipalities in Massachusetts should give homeowners a reasonable repayment schedule, as well as a hearing before a tax title is taken. If a house is taken, municipalities must ensure that the owner receives all proceeds from a sale beyond what is needed to return the entire city for overdue taxes, interest, and legal fees. The theft of home equity must stop.
“This wealth confiscation action is predatory and unconstitutional,” says Mitch. “Municipalities should only benefit from the principal, interest and collection costs owed to them.” “It was a failed attempt by the town of Greenfield to confiscate our capital,” says Joan. “We want the Court to repeal this egregious law and want cities to protect property owners who have their assets stolen. No Massachusetts homeowner should endure a punitive process like this.
Al Norman’s Pushback column appears in the Recorder every third Wednesday of the month. He can be contacted at email@example.com.