Months after Supreme Court ruling, 'equity theft' law still on the books in Massachusetts
The Supreme Court ruled the practice unconstitutional back in May, but some homeowners still face uncertainty as lawmakers have yet to vote on a change to the Massachusetts law.
Updated: 6:40 PM EDT Sep 7, 2023
BOLTON, Mass. —
It's a practice some call equity theft: cities, towns and even private companies foreclose on homeowners over unpaid taxes, then pocketing the profits. The Supreme Court ruled it unconstitutional back in May, but 5 Investigates found some communities are still moving forward like it’s business as usual.
Alan DiPietro is the owner of Nashaway Trail Alpacas, which straddles the town line of Bolton and Stow. After falling behind on the taxes he owed to the town of Bolton, DiPietro said he wanted to sell one parcel of land to pay what he owed.
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“We had issues that farmers always do,” he said of his financial problems.
DiPietro says he found a buyer ready to pay much more than he owed in taxes, but he couldn’t close the deal, because the town had already seized everything.
“I think it’s incredibly unfair. I mean, it’s definitely unjust,” he said. “The town's put me so far back on my heels. I can't do anything else.”
Under current Massachusetts law, Bolton can foreclose on Alan's farm -- then sell the property and keep the profit -- even beyond what Alan owes in back taxes.
5 Investigates told you about a similar situation in Worcester. A woman there is fighting to keep her home, which she owns outright, after the city sold her $2,600 tax lien to a private company called Tallage. Her home is worth roughly $300,000.
Massachusetts is one of 14 states that allowed municipalities or even private companies to foreclose on a property and keep all the profits, beyond just what is owed. But in May, the Supreme Court ruled that practice is unconstitutional.
Since then, some states, including New York and Nebraska, have changed their practices.
But despite having six bills proposed on Beacon Hill, and the Massachusetts Attorney General declaring the current law unconstitutional, state lawmakers don't seem to feel the urgency to make any changes.
“In Massachusetts, it's been a question that's been raised repeatedly over prior years,” said attorney Peter Brown, who advises more than 20 municipalities in Massachusetts on tax title issues.
“I think the legislature should make clear that cities and towns have an obligation to account and to provide any surplus to a former owner in the event of a foreclosure and an auction.”
But with a lack of action at the State House, Massachusetts cities and towns are left to interpret the current law for themselves.
5 Investigates reached out to 9 communities that had previously sold tax titles at auctions to a private company: Dedham, Hardwick, Lowell, Medway, New Bedford, Quincy, Shirley, Uxbridge and Worcester.
In light of the Supreme Court decision, Medway told us it paused it's foreclosure process. Dedham said it doesn't have any auctions scheduled at this time, while Quincy went forward and sold tax titles to a private company in June.
"Given the current uncertainty, we are eager to hear from the Legislature on any changes to current Mass General Law as to how those liens are handled when they are sold to private entities," Quincy city officials said in a statement.
“It completely erodes confidence in the government and has the government betray its people,” said attorney Scott Lang, who was formerly mayor of New Bedford Mayor. “That's part of government to work with people to resolve problems.”
Lang said he never sold tax titles when he was in office.
“People don't buy a house and say, I don't think I'll pay my taxes,” he said. “What happens is something in life has interrupted their ability to have the cash flow to pay.”
One bill currently under consideration on Beacon Hill would order excess proceeds from tax foreclosures be returned to the resident.
DiPietro, who owns the farm in Bolton, says some kind of fix is long overdue.
“It seems like they should have done it before just because it's the right thing to do. But now with the Supreme Court decision, it seems like they have to do it. I don't know how they can not do it.”
The Town of Bolton declined to comment on Alan's case citing pending litigation, but noted they do does not sell tax titles to private companies.
5 Investigates reached out to the Speaker of the House, Senate President and Governor Healey. A spokesperson for Healey said she would review any legislation that reaches her desk, and Speaker Mariano's office said House lawmakers are "reviewing this issue through the formal legislative process and working towards a solution."
The Senate President did not respond for comment