The budget signed by Governor Healey puts an end to “home equity theft” — the process that happens when a property is taken by city or town by foreclosure due to the homeowner owing back taxes. Currently, when the municipality sells the home, they are allowed to keep the full proceeds of the sale, above and beyond what is owed in back taxes. The homeowner is left with nothing.
Under the new law, home equity theft stops, and the “excess equity” — the remaining value of the sale after the taxes and other charges are paid — will be returned to the homeowner.
I filed a bill (S. 921) to end home equity theft that was incorporated into the Senate budget, along with bills from other colleagues.
I spoke in support of this policy when the Senate debated the budget, and thanked the constituents and advocates who have fought hard for this legislation. Watch my remarks here.
The budget provisions implement the Massachusetts court decision from April, which relied on a Supreme Court decision last year. The unanimous Supreme Court decision in Tyler v Hennepin County declared that “the taxpayer must render unto Caesar what is Caesar’s, but no more.”
Massachusetts was one of 12 states where home equity theft could occur.
The new law also provides for clearer notices, in multiple languages, and using understandable language, so that people are aware of what could happen when they fall behind on their taxes, and are aware of the process for getting back what’s owed to them.
Other provisions of the law include:
- Reduces the interest rate on past due amounts from 16% to 8%.
- Allows 10-year payment agreements, instead of 5 years as in current law. This gives homeowners more time to pay back taxes owed.
- Removes the limitation that only 50% of accrued interest may be waived by agreements between municipalities and delinquent taxpayers, allowing cities and towns to waive more taxes owed.
- Lowers from 25% to 10% that amount of an initial payment that must be made for delinquent taxpayers to get their land back.
- Expands from 6 to 12 months the amount of time that a former homeowner can pursue their right to sue in Superior Court to get their property back.
Under the new law, a former property owner whose property was foreclosed with a final judgment of foreclosure after May 24, 2021 may file a written complaint in the Superior Court for the return of their excess equity.
