Superior Court Judge Invalidates “Equity Theft” Law as Unconstitutional
Decision brings Massachusetts into compliance with 2023 U.S. Supreme Court ruling
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.
Ashley Mills was on the verge of losing her fully paid for Springfield home worth around $230,000 due to a $22,000 property tax debt. On Mills behalf, the Pioneer Public Interest Law Center, Greater Boston Legal Services, and the law firms of Morgan Lewis and Greenberg Traurig successfully challenged the law, known as Chapter 60, that would have allowed Springfield to keep the more than $200,000 difference between the home’s fair market value and the taxes owed.
The ruling by Springfield Superior Court Judge Michael Callan comes after the U.S. Supreme Court unanimously ruled last year in Tyler v. Hennepin County that a Minnesota statute substantially similar to the Commonwealth’s “equity theft” law was unconstitutional because it denied reasonable compensation to a homeowner for the taking of her property.
“We see many low-income or elderly homeowners who, having long ago paid off their mortgages, fall behind in their taxes,” said Catherine Kay of Community Legal Aid, who represents Ashley Mills in the Land Court tax lien foreclosure that led to this action. “Suddenly they face losing their homes and all the equity they built over the years. “Not only does the statute deprive these homeowners of their hard-earned equity, but it does so without adequate notice and hearing rights.”
“This is primarily a legislative issue,” said Attorney Todd Kaplan of Greater Boston Legal Services. “Judge Callan properly called upon the Legislature to take action to correct the injustice of Chapter 60.”
Mills, 26, lives with her two-year-old son and disabled mother in the home she inherited from her grandmother that is her only financial asset. If it is foreclosed on and she doesn’t 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 even though they have an asset worth hundreds of thousands of dollars.
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 by Springfield under Chapter 60. The City of Springfield filed a motion for judgment of foreclosure in May 2023.
“In Tyler, the Supreme Court sent a clear message that any surplus beyond the tax debt should 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 Supreme Court’s ruling makes it clear that such laws are unconstitutional and therefore unenforceable. Cities and towns are on notice that using Chapter 60 in this predatory manner violates fundamental rights under the federal and state constitutions.”
In a timely and well-reasoned opinion, the Hampden Superior Court found Chapter 60 unconstitutional. Both owners of real estate and municipalities were in need of such a definitive ruling by a Massachusetts court. Now the state Legislature must act to address the constitutional infirmities in Chapter 60.
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Community Legal Aid (CLA) provides free civil services to the low-income and elderly residents of the counties of Western and Central Massachusetts (Berkshire, Franklin, Hampden, Hampshire, and Worcester, and maintains offices in Worcester, Fitchburg, Springfield, Northampton and Pittsfield. CLA works to assure fairness for all in the justice system, protecting homes, livelihoods, heal and families. For more information, please visit www.communitylegal.org.
Greater Boston Legal Services (GBLS): GBLS assists survivors of domestic violence, homeless families, elders, people with disabilities, homeowners facing foreclosure, tenants facing eviction, low-wage workers, families with no source of income, and immigrants facing persecution. Annually, GBLS provides legal assistance to more than 10,000 families and individuals who live at or below 125% of the federal poverty standard. GBLS also provides legal counsel to dozens of community-based groups and organizations and conducts strategic impact advocacy to bring about positive systematic change throughout the region and state. For more information, please visit www.gbls.org.
Pioneer Public Interest Law Center (PPILC) is a nonprofit, nonpartisan legal research and litigation entity, organized under Section 501(c)(3) of the Internal Revenue Code. PPILC is a public-interest law firm that defends and promotes educational options, accountable government and economic opportunity across the Northeast and around the country. Through legal action and public education, PPILC works to preserve and enhance liberties grounded in the constitutions and civil rights laws of the United States and the individual New England states.
