SPRINGFIELD, MA –A Massachusetts Superior Court has ruled that a state law allowing municipalities (or private actors to whom municipalities sell the right to foreclose) to foreclose on homes due to property tax debt without having to pay the homeowner the difference between the taxes owed and the value of the home is unconstitutional as applied to the facts of the case at hand.
BOSTON – The Pioneer Public Interest Law Center and Greater Boston Legal Services have filed an action with Massachusetts’ Supreme Judicial Court (SJC) to enjoin the City of Springfield from foreclosing on a home worth about $230,000 because of a $22,000 unpaid tax bill without returning the more than $200,000 difference between the value of the home and the tax liability to the homeowner.
The action comes after the U.S. Supreme Court unanimously found earlier this year in Tyler v. Hennepin County that a Minnesota statute substantially similar to the Commonwealth’s “equity theft” law was unconstitutional because it denied just compensation to a homeowner for the taking of her property. State Attorney General Andrea Campbell recently opined that Tyler renders the Massachusetts law, known as Chapter 60, unconstitutional.
“In Tyler, the Supreme Court sent a clear message that any surplus beyond the tax debt must be returned to the homeowner,” said Pioneer Public Interest Law Center President Frank Bailey. “Massachusetts is one of a minority of states that has a law like Minnesota’s, and the Court’s ruling makes it clear that such laws are unconstitutional and therefore unenforceable.”
In Tyler, the Court unanimously ruled in favor of Geraldine Tyler, an elderly woman who had lost her home valued at $40,000 because of $15,000 in unpaid property taxes. Pioneer Public Interest Law Center filed an amicus brief in the case arguing that the Minnesota statute was unconstitutional.
In the Massachusetts case, Ashley Mills is on the verge of losing her Springfield home worth around $230,000 and for which the mortgage has been fully paid, due to a $22,000 property tax debt. Currently, Chapter 60 allows Springfield — or a private actor to whom a municipality sells its right to foreclose — to keep the more than $200,000 difference between the home’s fair market value and the taxes owed.
Mills, 25, lives with her 22-month-old son and disabled mother in the home she inherited from her grandmother. The home is her only financial asset. If it is foreclosed on and she does not receive the more than $200,000 of remaining equity after the tax debt is satisfied, Ashley, her toddler, and her disabled mother are at risk of becoming homeless.
In 2016, Mills was unable to pay $1,636.70 in property taxes she owed. Over the next three years, she entered into payment agreements with the city, but was unable to catch up, largely due to a punitive 16 percent interest rate and other charges imposed under Chapter 60. In May, the City of Springfield filed a motion in the Massachusetts Land Court for judgment of foreclosure.
“Ms. Mills will continue to use every avenue available to pay her taxes and keep her home,” said Catherine M. Kay, Supervising Attorney at Community Legal Aid, who represents Mills in the Land Court foreclosure case. “But those options are limited at this point. If she cannot save her home, she should at least receive the equity in it.”
Ashley Mills’ home is but one example among dozens of unconstitutional tax takings in Massachusetts this year. As a result, in addition to enjoining the City of Springfield from taking her home, the Pioneer Public Interest Law Center and Greater Boston Legal Services are also asking the SJC to enjoin all use of Chapter 60 takings for 90 days.
The action is meant to give the state Legislature time to amend the law to conform with Tyler and allow for a permanent injunction that would prevent Springfield from taking Ms. Mills’ home unless the city makes a provision to turn over, in a reasonable time, the difference between the fair market value of the home and the amount Mills owes in taxes.
Prior to Tyler, 13 states had laws similar to Chapter 60 and the Minnesota statue the Court struck down. Since then, Minnesota, Maine and Nebraska have changed their laws. Illinois has frozen sales of the right to foreclose.
“Low-income households are especially vulnerable to tax foreclosures and Massachusetts has failed to provide these homeowners with realistic options to repay tax arrears,” said Todd S. Kaplan, Senior Attorney at Greater Boston Legal Services. “We are asking the Supreme Judicial Court to stop tax foreclosures while the Legislature works to align the tax foreclosure process with Tyler. The Legislature has an opportunity to ensure that tax foreclosures are a last resort and are done in accordance with the Constitution.”
Ruling could impact Worcester homeowner’s suit against city and private tax lien buyer
BOSTON, May 26, 2023 – The United States Supreme Court today struck down Minnesota’s tax foreclosure scheme, ruling that a Minnesota homeowner who lost her home to a tax foreclosure was entitled to the surplus from the home’s sale.
In Tyler v. Hennepin County, Geraldine Tyler lost her home valued at $40,000 because she had not paid $15,000 in property taxes.
“The Court sent a clear message today, ruling unanimously that any surplus beyond the tax debt should be returned to the homeowner,” said Pioneer Public Interest Law Center President Frank Bailey.
The Supreme Court’s ruling could affect a Massachusetts case filed in U.S. Bankruptcy Court earlier this month. There, homeowner Carmen Rodriguez sued the City of Worcester and a tax lien buyer, Tallage Davis, LLC, seeking to invalidate a state statute that allows municipalities to confiscate people’s homes — including all the equity built up over many years — when they fall behind on their real estate taxes. Ms. Rodriguez is represented by the Pioneer Public Interest Law Center, Morgan, Lewis & Bockius LLP and Greater Boston Legal Services.
Ms. Rodriguez has owned her Worcester home for decades. She raised her family there and paid the mortgage in full. When she became ill and had to leave her job at the TJ Maxx warehouse where she worked for 37 years, she fell behind in her city real estate taxes, but she was not terribly worried because she owed only about $2,600 and her house was worth $200,000 to $300,000.
Worcester, however, quickly moved ahead with a little-known practice of selling its right to foreclose on Ms. Rodriguez’s home to Tallage Davis, LLC, a Boston-based tax title buyer. Tallage soon took title to the house and commenced eviction proceedings against Carmen and her son, seeking to remove her from the house during the 2022 holidays.
Ms. Rodriguez continued to make payments to Worcester even after Tallage filed a tax foreclosure, as she was unaware that the company was trying to foreclose on her home.
Ms. Rodriguez is not alone in her efforts to invalidate what many have called the “equity theft process.” Approximately 13 states have laws that allow equity theft.
In the U.S. Supreme Court case, Geraldine Tyler, an elderly Minnesota woman, lost her home under that state’s statute, which tracks the Massachusetts law. Like Ms. Rodriguez, Tyler argued that statutes such as these violate state and federal constitutional provisions that prohibit the taking of property without just compensation and the charging of unreasonable fines. Today’s decision found that Minnesota violated the U.S. Constitution when it took the entire value of her home for the taxes.
“I appreciate that the U.S. Supreme Court ruled that homeowner’s have rights and they should not lose the entire value of their home for a small amount of taxes owed,” Rodriguez said. “I am fortunate to have great team of lawyers in my corner to show how unjust this is. Hopefully it will never happen to another homeowner in Massachusetts.”
Carmen Rodriguez was preparing to move out of her home prior to accessing legal assistance.
“The process used by Worcester does not even benefit the city’s citizens, because while Worcester received less than $4,000, Tallage took the deed to Carmen’s home worth about $300,000,” said Todd Kaplan of Greater Boston Legal Services. “This process makes no economic sense for Massachusetts communities; it only enriches people like those who own Tallage.”
Supreme Court ruling will impact state laws and case of Worcester homeowner
On May 26, 2023, the United States Supreme Court in Tyler v. Hennepin County struck down Minnesota’s tax foreclosure scheme. The Court ruled that a Minnesota homeowner who lost her home to a tax foreclosure was entitled to the surplus from the home’s sale. The unanimous ruling has put the spotlight on laws in several states that allow municipalities to sell tax liens to private parties, which then foreclose on properties, pay back taxes and fees, and then retain most or all of the remaining equity.
The Supreme Court’s ruling is expected to impact a Massachusetts case filed in U.S. Bankruptcy Court in which homeowner Carmen Rodriguez sued the City of Worcester and a tax lien buyer, Tallage Davis, LLC, seeking to invalidate a state statute that allows municipalities to confiscate people’s homes — including all the equity built up over many years — when they fall behind on their real estate taxes. Ms. Rodriguez was represented by the Pioneer Public Interest Law Center, Morgan, Lewis & Bockius LLP and Greater Boston Legal Services.
“The Court sent a clear message, ruling unanimously that any surplus beyond the tax debt should be returned to the homeowner,” said Frank Bailey, president of Pioneer Public Interest Law Center, which filed an amicus brief in Tyler v. Hennepin County.
In the Court’s opinion, Chief Justice John Roberts wrote: The principle that a government may not take more from a taxpayer than she owes can trace its origins at least as far back as Runnymeade in 1215, where King John swore in the Magna Carta that when his sheriff or bailiff came to collect any debts owed him from a dead man, they could remove property ‘until the debt which is evident shall be fully paid to us; and the residue shall be left to the executors to fulfil the will of the deceased.'”
In the U.S. Supreme Court case, Geraldine Tyler, an elderly Minnesota woman, lost her home under that state’s statute, which tracks the Massachusetts law. Like Ms. Rodriguez, Tyler argued that statutes such as these violate state and federal constitutional provisions that prohibit the taking of property without just compensation and the charging of unreasonable fines. The Court found that Minnesota violated the U.S. Constitution when it took the entire value of her home for the taxes.
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