Legal Property Theft: Legal Defense Against Town Taxman Taking Neediests’ Deeds

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This week on Hubwonk, host Joe Selvaggi talks with President of PioneerLegal and retired federal judge, Hon. Frank J. Bailey, about PioneelLegal’s work to advocate for the U.S. constitutional prohibition against the practice of municipalities taking the entire value of a property to settle a relatively small tax debt, a procedure legal in Massachusetts and thirteen other states.

Guest:

The Hon. Frank J. Bailey was the United States Bankruptcy Judge for the District of Massachusetts (ret.). He has also served as an appellate judge on the First Circuit Bankruptcy Appellate Panel. Judge Bailey served as judicial law clerk with the Massachusetts Supreme Judicial Court, an associate at the Boston office of Sullivan & Worcester LLP, and spent 22 years as a partner at Sherin and Lodgen LLP. Judge Bailey was elected by his peers to serve as the President of the National Conference of Bankruptcy Judges (“NCBJ”), a position that he held until October 2021. He has been active in leadership positions in the American Bar Association, including as the Judicial Member at Large on the ABA Board of Governors and as a member of the ABA Executive Committee. Judge Bailey served as the Chair of the National Conference of Federal Trial Judges, an ABA entity that includes over 400 federal judges. Beyond his judicial leadership positions, Judge Bailey has served as the Chair of the Immigrant Learning Center in Malden, Massachusetts, a board member of the Institute for Immigration Research at George Mason University, as President of the Massachusetts Appleseed Center for Law and Justice, and on the Massachusetts Council of the New England Legal Foundation. Judge Bailey served as adjunct faculty at the Boston University School of Law and at New England Law School. He currently teaches Advanced Business Restructuring at Suffolk University School of Law. He has been active in international judicial training and legal education, including in Argentina, Bulgaria, Kazakhstan, Russia, Uzbekistan, and Ukraine. He received his undergraduate degree from Georgetown University, School of Foreign Service (BSFS in economics) in 1977 and his JD from Suffolk University in 1980. Judge Bailey retired from judicial service on June 1, 2022.

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Please excuse typos.

Joe Selvaggi:

This is Hubwonk. I’m Joe Selvaggi.

Joe Selvaggi:

Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. Can a municipality take a home for back taxes and leave the owner with nothing in 13 states, including Massachusetts? The answer is yes. A county can sell a property on which taxes are owed and keep the entire proceeds of the home, even when the value of the home far exceeds the tax debt. Not surprisingly, it is often the most vulnerable citizens, such as the elderly or those in difficult circumstances who find themselves dispossessed and who have few resources to either settle debt or defend themselves against government action. Indeed, while all municipalities and states that permit such action could legally foreclose, sell and keep all proceeds from a home, it is the towns and counties in the least wealthy communities that quietly avail themselves of this power. How does such government and action comport with limits enshrined in constitutional rights and what can concern citizens, legislators, and property right advocates do to limit what seems to violate both common law and common sense?

Joe Selvaggi:

My guest today is President of Pioneer Legal and retired federal judge, the honorable Frank J. Bailey. In his role as President of Pioneer Legal Judge Bailey has filed an Amicus Brief urging the US Supreme Court to hear two related cases that test the constitutionality of similar Nebraska and Minnesota laws that permit the state to take a private home, sell it, and keep the entire proceeds, even if the property sells for much more than the taxes, interests, and costs of collection. The brief urge the court to determine such actions to be unconstitutional as they are in violation of prohibition of pays without just compensation. If successful, the pro bon work of Pioneer Legal and others who have joined the briefs would offer federal protection to homeowners in Massachusetts, who in the most difficult times of their lives may otherwise find themselves vulnerable to such egregious practices. When I return, I’ll be joined by president of Pioneer Legal, the Honorable Judge Frank Bailey. Okay, we’re back. This is Hubwonk. I’m Joe Selvaggi. I’m now pleased to be joined by the president of Pioneer Legalthe Honorable Judge. Frank Bailey, welcome to Hubwonk, Judge Bailey.

Hon. Frank Bailey:

Hi, Joe. Thanks for having me on.

Joe Selvaggi:

Well, we’re delighted. This is your first appearance on Hub Wonk. Very excited. And as the head of Pioneer Legal with a, with a a fantastic legal background I’m sure our listeners are eager to learn more about you. So, before we dive into our topic why don’t you start off by sharing with our listeners a bit about your background and what I think is most important is what is it in the law that has kept your interest and where you, you know, you, you, you find most interesting about about everything you’ve seen in your career?

Hon. Frank Bailey:

Wellsure. I’m a 1980 law school graduate, and from after that I clerked in the Massachusetts Supreme Judicial Courtfor Justice Wilkins. Then I practiced law for about 30 yearsat two firms, essentially Sullivan and Worcester and later at Sherin and Lodgen about 15 years ago, I was appointed to the United States Bankruptcy Court bench in Boston, sitting in the district of Massachusetts. I was the chief judge there for about four years. I also served on the First Circuit bankruptcy appellate panel where we reviewed the work of other judges throughout the First Circuit. And then just earlier this year I retired from the benchreally in order to take on this new responsibility, which is to serve as the president of Pioneer LegalPioneer Legal as it really started when I got here. So that’s my backgroundJoe.

Joe Selvaggi:

Wonderful. Well, that’s great. So I, again, I think your experience in bankruptcy issues speaks to our issue today. I think we’ll get into it a little bit further, but you are, I assume, are are very in touch with property rights and how those either can be taken or, or, or are protected. Now on a general level, you’re, you say you’re the inaugural, I guess, president of Pioneer Legal. What is Pioneer Legal’s mission and where do you see it fitting into sort of the, the tapestry of, of, of legal advocacy?

Hon. Frank Bailey:

Sure. So Pioneer Legal is a, a nonpartisan public interest law firm. Essentially what that means is we take on cases because we’re interested in the issues not because we get paid. And it’s interesting I have found that when lawyers don’t charge for their time, the, the clients do tend to find you <laugh>. So, and our, we, we really have three legs to the stool at Pioneer Legal. We promote and defend education options for children. And we work extensively on, on making government accountable and on ensuring economic opportunity is freely and fairly available without undo government restriction. So those are sort of the three legs to our stool.

Joe Selvaggi:

So as opposed to being a hired gun for some moneyed interest, you’re the opposite. You’re advocating for the little guy now because your work is, is pro bono. And you mentioned three areas that really do need an advocate, because otherwise they would be somewhat less powerful than the, than the forces they’re up against. So that’s a good sort of setup for our conversation today. We’re gonna talk about an issue we’re, we’re calling equity theft. I’m gonna put it in the most basic le legal or lay terms. You know, if you’ll allow me, I’m gonna say that what I’m calling equity theft is where the government collects taxes that are owed to it. But it does so by forcefully either selling the house and or taking the house, selling it, and keeping all the proceeds. That is to say, I owe X on my house in, in taxes, the government forces me to sell it. It collects the entire amount of the money far in excess of what I in taxes. That’s my view. Tell me how you would define it.

Hon. Frank Bailey:

So that’s, You’ve got it. I mean, it’s like all of the things that we’re doing at Pioneer Legal we’re testing the, the extent of government involvement in our lives against people’s civil rights and making sure that government doesn’t exceed its authority. And that’s exactly what this is about. The, it’s, it’s about in about 13 different states, including Massachusetts, where I live and we’re Pioneer Legal is located, of course in those 13 states when a a community at City Town community forecloses on a tax lie because someone has fallen behind on their property taxes the government or its s and e can, can keep all of the proceeds even though and I’m sure we’ll get into some narrow examples or some specific examples of where very little is owed in taxes, but very large amounts of dollars are kept by the foreclosing entity, whether it’s a, a city, town or, or a, I say asee, meaning a private enterprise that maybe acquired that lie from the city or town.

Joe Selvaggi:

So, I I want to take it down to, I enjoyed reading your summary of your amicus brief that was on Pioneer Legal, that describe some really hair curling examples of, of what we’re talking about. Let our listeners think this is some very dry academic conversation. I think when you put names, faces, and numbers on it, it becomes real. And it’ll get, I think our listeners you know, anger fired up. So why don’t you take us us through the basic fact patterns and, and you mentioned two cases in your piece, Kevin Fair versus Continental Resources and Tyler versus Hennepin County to illustrate, you know, what we’re talking about, how, how bad it is that we’re, what we’re talking about.

Hon. Frank Bailey:

Well, the stories Joe really go on and on here. Those are the two cases that are app pending at the Supreme Court and in which we filed our brief. And, and I’ll, I’ll describe them and others during the, during our discussion today. So I’ll start with the Fair versus Continental Resources which is a case that came out of Nebraska. And so the fairs were husband and wife Terry and her husband were had owned their home for 27 years. When Terry became sick her husband Kevin was unable to keep up the amount of work that he had been able to perform before that at their income as a family dropped. She was quite gravely ill, and that went on for a few years.

Hon. Frank Bailey:

So even though they had actually paid off their mortgage entirely, so they owned the house outright they fell behind on the taxes to the amount of $588 and 21 cents. Doesn’t sound like much but then relying on a a statute that was enacted in 1870 that allows communities to collect on past due taxes and to put a lien on the house ultimately the com the the community well, actually sold the lien to something called Community Resources, which is a private enterprise operating in Nebraska and a few other places and community resources ultimately for, we say foreclosed on the lien. It had risen because of interest and, and and, and attorney’s fees and a few other things. But ultimately they sold the fairs house. Unfortunately, Terry Fair, Mrs. Fair passed away in the interim. And Kevin couldn’t come up with the dollars to pay off the lien. And so they sold the property. And the sale price was over $60,000, which again, on the east coast maybe, and doesn’t sound like a whole lot of money, but it was really the family wealth that the fairs had been able to accumulate by owning, owning this home. So, on a account of $588 tax lie, they lost a house worth $60,000.

Joe Selvaggi:

What I found interesting about this, I mean, I think it’s important, you know, that his, he left his job to support his, to take care of his wife who had, was diagnosed with multiple sclerosis, if I can say that. Which is a terrible disease. And I, I think for much of the when the, the lien was sold in your, in your piece, if I’ve got this right, they weren’t even aware that the lien had been sold. Is that right? So much of this was sort of a surprise. They, as you say, had paid off their mortgage. So this tax lie is, is floating around in the ether somewhere, and suddenly someone knocks on the door and say, Pay us this amount. Or you lose literally every, every dollar you’ve put into your house.

Hon. Frank Bailey:

Yeah. So the, that, that, that’s right. And, you know, the knock on the door often isn’t even someone saying pay off the lien. It’s hand me the keys. You know, it’s time for you to leave because you’re being evicted. We now own the house, either the entity or the town, or the designee of the town. And yes, in this instance, you know, Kevin was so distracted he was unable to keep track of the status. You, I, I, look, I spent 15 years on the bankruptcy bench, and there were times when I would go just walking over to my clerk’s office and I would see people coming in to file for bankruptcy. And often they had individuals, not lawyers, you know, would have a bag of mail with them. Couple times they helped them pick up the bag of mail and put it on the counter, and it was mostly mail that they had received and, and had not even opened. So they weren’t even aware particularly of how much they owed. People get distracted, and when they do sometimes they they things are happening behind the scenes in their minds. And that’s what happened to Kevin fair

Joe Selvaggi:

Indeed. So, oh, can you share with us the other one I mentioned, the Tyler versus Hennepin Counties another awful, awful example,

Hon. Frank Bailey:

Right? So, in, in that, in that case Mrs. Tyler now she, that’s Hennepin County happens to be it’s it’s a Minneapolis St. Paul area. And she was is a 90 plus year old woman. This particular property was property that was a condo that she had bought, which she thought she could live out her days. She also fell behind on, on her on her property taxes. She had moved out. She moved in with family members because the neighborhood in which her condo existed was in, in a, what turned out to be a bad and violent sort of neighborhood. She was afraid to live there. She moved out, she rented the the the condo and when folks didn’t pay the rent, another thing that we saw a lot of in the bankruptcy court then she as a one-off landlord didn’t have the financial resources to pay the taxes. I, I don’t have the numbers in front of me here, here, but they were, I think, somewhat worse even than what Kevin Fair faced. Again, small dollars in, in in taxes that were passed due and large value that she lost.

Joe Selvaggi:

I, I think the important detail is not that we’re or you are advocating that people ought not to pay their taxes, they should pay their taxes, but if, and they, they run into hard times and that house is foreclosed on, or, or, so, the government is entitled to the money of its taxes, not, not the entire proceeds of the home. I, you know, just to put a, a big underline outta that, we’re not saying taxes shouldn’t be paid, we’re saying, you know fair is fair.

Hon. Frank Bailey:

That’s right. That’s right. That’s right. Well said. I mean, you know, that that’s absolutely true. It, it doesn’t enter into this discussion that people should pay their taxes, they should pay their taxes but when they, for one reason or another, and it happens in life, that they don’t pay their taxes that if the property gets sold they ought not to lose all of their equity in the property, which is a windfall to the communities that do the foreclosures.

Joe Selvaggi:

So, so I’m gonna go on dangerous ground here and try to, you know, use my layperson brain to, to sort of see what I find wrong about this and, and where it might attach to, you know, some legal principle in my mind, the Fifth Amendment, there’s a tickings clause in there that says, Look, if the government does take something from you, you know, it could be to build a highway, you know, through your house they gotta compensate you fairly at the very basic level. Again, not as an attorney, but, you know, I can read the Constitution. It’s, it’s short enough. Isn’t this a violation of that just fundamental principle of taking?

Hon. Frank Bailey:

Well we think it is. And and in, in a, we, we, we, we have here though a split among the courts, and that’s what makes for a case that we think the Supreme Court should consider. And that’s why we have filed our brief. There’s a split among the state Supreme Courts on whether or not it violates the Fifth Amendment takings clause or the due process clause of the 15th and 14th amendments. And there’s a question as to and in some state, and in some some state, supreme Courts have gone the other way with that and agreed with the position that we are advocating here, which is that it violates the Fifth Amendment. It’s also a split in the federal courts. The the eighth circuit that would be the Minnesota including Minnesota has concluded that it is not a violation of the Fifth Amendment for reasons I can, I can explain and the I

Joe Selvaggi:

Judge Bailey, I was gonna say, as, as an attorney and a judge I think the mark of a great attorneys, you can forcefully argue either side of the case. So you and I seem to be squarely on one side, make the best case for, as you say, these courts are split with what seems to me not a very difficult or controversial issue, make the case that the other side of the court makes that, that this is a good idea.

Hon. Frank Bailey:

Right? So the arguments on the other side of this are I can make them, I can make them convincingly, I’m sorry to tell

Joe Selvaggi:

You, but you don’t have to, you don’t have to persuade me, but at least give our messages. What’s the logic here?

Hon. Frank Bailey:

The first thing they say is some courts have found, including the two that we are dealing with here, have found that it’s not a taking at all. They have said that it’s a fine. So it if in other words, if you don’t pay your taxes, you may suffer a penalty, and that penalty is the nature of a fine and so rather than leving that they’re actually living on a fine rather than than selling your interest in property and keeping the proceeds. I, I, shall I give you the answer to that? Because I think it’s,

Joe Selvaggi:

Yeah, sure. Go ahead. Shoot that one down, because it seems pretty, you know, if I owe a dollar on a million dollar house as the same, fine as if I owe you know, a million dollar on a million, you know, to me it seems arbitrary, But go ahead, just shoot it down.

Hon. Frank Bailey:

Well, I have to rely on another amendment. And the courts don’t rely heavily on this argument, but this is what the argument that they make and, and and, and the courts have, some courts have accepted it, you know, under the Eighth Amendment which means that punishment, you know, can’t be cruel and unusual. We all know about that, right? So you, that limits the kind of penalty that the state can, the state and federal government can impose on criminals. But it also says that fines shall not be excessive. And so, I don’t know, in whose mind taking $60,000 in equity on account of a $580 tax wouldn’t be deemed excessive. And most of the courts agree with that. Although not all the, the, then they delve into the due process arguments. And on this, it gets very, very technical.

Hon. Frank Bailey:

But what the, essentially, I’ll try to make it as as easy, as simple as I can. What, what the courts have said is that the well, the fifth, the fifth and 14th Amendment say, No state shall deprive a person of life, liberty, or property without due process of law. And the Fifth Amendment of course goes on to say that property should not, shall not be taken without just compensation. What, what the courts have found and the arguments have been made are that it isn’t a taking because a, a a taking is limited to eminent domain. It’s not, doesn’t include where the government is, is wearing its taxing hat rather than it’s acqui, rather than acquiring property for future development of a public nature. And so they draw a distinction of that sort and say, This is the government acting, you know, with out of the, the Fisk, if you will, the public Fisk in trying to collect taxes. And that there is no limitation on the ability to to of the government to take for that purpose. So it’s not, it’s not a constitutional taking, is what they say.

Joe Selvaggi:

So, so again, I would just sort of re rehash what, what you said. You mentioned there’s, you know, federal limits on these kinds of things that ought to, we, we hope, constrain what states can do first. The fifth is the taking clause, but then the 14th imposes, you know, it says all the rights that you have at a federal level are imposed on the state, meaning they sort of, the, the Constitution applies to the state’s laws as well, right? That’s that’s right. End version. And what, what you’re saying because they’re not building a highway through the house where if they had to knock down your house to build a highway, then that’s a, that’s a taking. But if they, if it deals with the fiscal matters like taxes, well then all bets are off. So I wanna build on that. If the gov, if the state says okays are off, and it is appropriate to, for a $500 tax lie, to take $60,000 worth of equity is there no, you know, as, as Americans, is there no sort of appeal to some sort of natural law or some sort of I don’t know human right to property that says the government can’t merely waive a wand and, and take my property from me without you know, unfairly?

Hon. Frank Bailey:

That’s a great question. And, you know lawyers and judges rarely deal with natural law, right? I mean, we’re dealing with, with right, statutory law or judge made law, decisional law, common law. But this case, actually, this fact pattern does in fact raise that very question. And in a recent sixth circuit case that where the sixth circuit, this is sitting in Ohio, the Sixth Circuit said, disagreed with the eighth circuit and said, this is in fact a taking. And, and, and the way that the court got there was it looked at Anglo American law from the Magna Carta on, right? So we’re talking about a, a, a long period of of jurisprudence here. And the court said that it was an aberration for a for any court to find that the state can, in, can, can define property rights in a, in a fashion that allows it to take property without just compensation, that that’s the underpinning of the, of the Constitution. And that even though the state may define property rights in the statutory, in the statutes of the, of the of the state that the legislature adopts, they can adopt a statute that says, This is no longer your property. But there’s a limitation on that. It seems rather sensible, doesn’t it? But that is certainly what the Sixth Circuit said in, in, in that case. So, yeah, there is a limit to the state’s ability to define, it’s what your, define a way, your interest in, in, in property,

Joe Selvaggi:

Right? Indeed. If you, if you, if there’s no limit, then there is no, you know, right. To, you know, there’s no taking clause, right? There’s, you know, so so let’s, let’s, you

Hon. Frank Bailey:

Know, let me, let me add to that just a little bit, because I, i, I think it’s important that everyone understand that the what the Sixth Circuit did was in really quite a wonderful opinion. I mean, it, I don’t recommend it to non-lawyers, but I,

Joe Selvaggi:

For for our listeners, we’re talking about the Hall versus Meisner case in Michigan, right? So if we are, okay,

Hon. Frank Bailey:

We are Joe, and it came down only a couple of weeks ago, and it’s a, it’s a, in, in my mind, a masterful opinion, and it should influence the Supreme Court on this, too. But the, as I say, the court traced the rights of debtors really right near and dear to my heart the rights of debtors from the Magna Carta on, and said, There is no circumstance in which a creditor gets to take property of the debtor if it’s used as, you know, to secure a loan or a mortgage, whatever it is, and to keep all of the proceeds over and above what they’re owed. And by looking at, at that in a whole host of different scenarios, the Sixth Circuit finally said, The government can’t step in and, and, and take property. Let me see if I can read to you a, a quote from that decision that I thought was really maybe my favorite part of the decision. Rarely do you see federal courts speak in such plain language, but here, here’s what they said.

Joe Selvaggi:

Judge Bailey, if you’ll permit me you had sent me the quotation, I believe it directly from Hall versus Ner, The county forcibly took property worth vastly more than the debts these plaintiffs owed and failed to refund any of the difference in some legal precincts. That sort of behavior is called theft. Okay, Judge, we, we’ve clearly defined the two sides. You say there’s disagreement, We have the sixth recent ruling we talked about in the Hall versus Meisner case in Michigan, and the eighth Circuit, I guess, in Nebraska. So when circuits disagree, I guess the next step is that the Supreme Court doesn’t, it doesn’t have to take it, but can take it. So what we, what we call that in the legal world is a grant cert, right? The, the, the court says, Okay, this is important enough. There’s, it’s, it’s substantive and there’s meaningful disagreement. We’re gonna settle it at, at the federal level once and for all. So, your work at Pioneer Legal, you’ve helped, I think, in so far as you, you’re encouraging the Supreme Court to take this case by writing an amicus brief. Is that right? You said please consider this, It’s very important. Share with our listeners. How does one encourage the court to take up an issue that you believe is important?

Hon. Frank Bailey:

So this is a, the, the certi procedure is one by which any, any litigant can ask the Supreme Court to take up their case and to give you some numbers on that. There’ll be over 5,000 requests to the US Supreme Court for this term. And I, I don’t know how many they’ll take, depends on how hard they wanna work. But but they will probably only take about 70 to 75 cases. So you can see that the odds are long, and the case has to be one of great importance, really. We think that this fits this is a circuit split and a state court Supreme Court split. That’s the kind of thing that the Supreme Court will be very inclined to, to take. I’ll add a footnote to that. And, and it’s that if the Supreme Court thinks, well, there might be a few other states coming this way, or other circuits coming this way in the next year, maybe we’ll wait till next year to take this one, We’re sure they’ll be back.

Hon. Frank Bailey:

Now, the, the amicus brief, or amicus brief procedure is that the Supreme Court allows friends of the court, that’s what amicus brief means to file briefs to expand upon and often to identify the policy issues that might be that might not be directly relevant to the dispute between parties A and B, but might be important to America. And and, and that’s what, that’s when you file an amicus brief, and that’s precisely what we what we did here, encouraging the court to take this issue up and decide it.

Joe Selvaggi:

And presumably then, if it is they agree to take the case it would be heard, I guess, presumably sometime in the not too distant future, You know, again, as you say, the either long, but this is great importance this case. Again, I’m gonna go into the realm of speculation, then say, you know, there’s healthy disagreement. You and I perhaps are on one side and see things the way we do given the makeup of the court, or I don’t know if this is a left right issue. It seems they seem to be passionate about individual rights and property rights. But I don’t wanna put words in your mouth. How do, how do you think that this court would react to this case?

Hon. Frank Bailey:

Well you’re absolutely right. This is not a right left issue. I, I, I don’t think so this is a, this is a case where I could see, I could see the court acting, you know, with, with no dissents. I, I I do believe that the issues that are raised by it could have other implications in other aspects of the law. And therefore, you know, maybe, maybe I’m not seeing all of that far be it from me to ever predict what the Supreme Court’s gonna do. But if I had to here, I would say that it’s, I, I’d say it’s likely that this term or next, they would take the case. And I do think that they will find that, you know, there are only 13 states that allow for this process right now that I think the Supreme Court would find this to be an unconstitutional taking and and would invalidate those state statutes that allow states to take the equity of a person far above what’s owed for taxes.

Joe Selvaggi:

As you say, the this issue only relates to those states who allow for it, Massachusetts being one of them. Let’s bring it back more locally, as you say. Pioneer Legal, and I am all, we’re all here in Massachusetts we’re talking about cases in Nebraska and Michigan but we’re one of those states. What have you seen here in Massachusetts? Less People think this is for an issue for some far away court. What have you seen here in Massachusetts where perhaps the state has taken some vulnerable person’s property with really no redress,

Hon. Frank Bailey:

Right? So yes, indeed, this is the law in Massachusetts. And in some ways our statute, I think is more vulnerable to attack on constitutional grounds than, than even the statutes in Nebraska and in Minnesota that are at issue currently at the Supreme Court, for reasons that I can describe. But yet, we at Pioneer Legal have had clients local individuals families who have lost their homes and in, in every instance that we’ve had these clients, the cases have settled for reasons that I can explain. But one example is a fellow named Mark ocio from Easton who is a construction worker. And he fell behind on his taxes on a family homestead that had been in that family for years, no mortgage on the property. He ended up owing $4,000 in taxes and and lo lost the property to a tax foreclosure.

Hon. Frank Bailey:

The property had a value of well over $300,000. Now that’s an example of a person who was able to settle with Easton and was able to get the property back and work out a payment plan on, on the small amount of taxes. So in, in, in Massachusetts the takings procedure is, is really peculiar because the all that has to happen is that the tax collector in the town needs only to file a certificate that says that the individuals are 14 days behind in, in paying their taxes. They then give a 14 day notice to the individual, and then they are able to unilaterally without even asking, you know, a court or, or anyone else for the right to do it, they can do what is, what is they, they can take the, the ownership of the property and transfer it to the town. So that’s a little more shocking than even what we see in, in other states.

Joe Selvaggi:

And, and yet this seems, you know, is trans credibility here, because I think, you know, we’re, that’s the case. Let’s say somebody, as you say, some people don’t get their mail, all kinds of things happen where they have a tragedy in the family. They’re not, you know, just can’t be bothered to pay their taxes. Things happen, right? God forbid. And after, if I do the math right, 28 days, whereas they may not do it, they have the right to do it where they have the right to take your, your property. It seems to me that this is more than a sort of a, a niche issue. This all of us pay taxes, and all of us would prefer not to have our, our property seized. Why is this not been more of an issue until now? You know, to me it seems like a you know a monster hiding in, in playing sight. What, why is it that

Hon. Frank Bailey:

Yeah, yeah. So why is that? I, I think that you know, it, it is a big issue. I’ll give you some numbers in a minute. I hope you’ll ask me about that. Cause I do have Massachusetts.

Joe Selvaggi:

Oh, sure. Again, I’ll, I’ll tee up the question. How many people does this happen to in Massachusetts in this, this great commonwealth of ours?

Hon. Frank Bailey:

Yeah, that’s a good, I mean, that, that, that’s important, isn’t it? Because are, were we talking about five cases a year, or are we talking about more? And we’re talking about a lot more than that. So, and, and then I can, I can tell you why I think it hasn’t come to the four. So the pi, the Pacific Legal Foundation is looking at this issue across the country, has done some really great work on it. And the Pacific Legal Foundation has looked at this issue very carefully around the country, including in Massachusetts. And they studied looking at every foreclosure tax foreclosure in Massachusetts from 2014 to 2020. And this is what they found, that mass homeowners who lost houses to tax foreclosure lost 87% of their home equity value. So o only 13, only on average. 13%. And it’s often, you know, that’s an average. So it’s less than that ended up going to the town or to some other creditor

Joe Selvaggi:

Say they lost seven eighths of their property to pay off one eighth of the property.

Hon. Frank Bailey:

That that’s right. That’s right. And the average equity lost on the sales that did occur in Massachusetts $260,000. Not surprising, given the value of homes in, in, in Massachusetts. And during that period, there were 31 communities exercised this, right? So not all communities do it, right? Some communities simply used the threat of the foreclosure as a way of working out a payment plan. Other communities sort of count on a, a large windfall on a few of these a year in order to add to the to the town finances. But in that period of time, 31 communities accounting for a third of the pop population of the state foreclosed on 254 homes and took 60 million more than they were owed on taxes. And another 154 homes were sold by a private company that purchased the tax deeds and made what Pacific Legal estimated at another 37 million.

Hon. Frank Bailey:

So it was only one private company was involved in that. So 37 million in that period of time in excess of what was owed to the, to the communities. So that’s, and I wanna emphasize, I wanna emphasize the tax deed nature of this. What I said before was that the tax collector goes and takes, has a deed issued and records it taking the, the, the, the home from the family that owns it. And and then they get into another process which is ultimately the foreclosure of the right to redeem the home. That takes a bit longer, so people have an opportunity to fix it, but they don’t. But they’ve already lost the the home by the time they practically, by the time they learn of it under our system.

Joe Selvaggi:

It’s extraordinary. What, what, what amazes me again, Massachusetts is a great great commonwealth tends to lean towards the more progressive end of the, the spectrum, and says, Okay, we’re comfortable with the idea that the state would come in and the people who are, I don’t know if you’ve collected data on this, but one has to assume if you’re having your house foreclosed because you owe taxes you’re either vulnerable because of life circumstances or, or financially vulnerable, you can’t pay it. So these are people who are helpless and, and this, and the state marches in and takes a, the entire house for a relatively small debt and considers that just fair. You know, it, it, it, I I don’t understand how this could be,

Hon. Frank Bailey:

Well, the, the and the number rises very quickly because in addition to taxes the, the basic tax due the Commonwealth authorizes cities and towns to add interest at the rate of 16% on the, on the amount due. So the number can get up there, and again, you know, you might start out at five or $600, and they can take, take the issue, a tax deed, a taking but a year or two later when they’re actually foreclosing on the lien, the number could be $5,000, which to some people is, even if they own an asset that’s worth three or $400,000 it is not a, an amount of money that they’re able to raise.

Joe Selvaggi:

So, so add loan sharking or, or user, or whatever legal term we wanna say to the crimes of the state here. So if our listeners have made it to the end here and are you know, totally fired up, and they want join the battle and make sure that their fellow Massachusetts residents don’t suffer this fate or their fellow Americans, if we settle this at the Supreme Court, how can those listeners who are fired up now support your work or learn more about your work and, and and rope season press joined the fight?

Hon. Frank Bailey:

Well you know, absolutely, and, and there is hope here Joe, because in a case that came down just in 2020 from our State Supreme Court that actually involved a tax taking of this sort, but didn’t involve the constitutionality of the statute, the then Chief Justice Ralph Gantz of the court in a footnote said he cited these other cases and said, you know, maybe soon we’ll see a case questioning the constitutionality of our state statute. That’s the way a state Supreme Court can say, Hey, guys, bring it on. You know, give us a chance at this. And, and so that, that’s what that’s why I think there’s some hope. I, I do believe when this gets to our State Supreme Court and pioneer legal hopes to get it there that this, our statute will be found to be unconstitutional.

Hon. Frank Bailey:

So yes, of course, we pioneer Legal, you know, is a 5 0 1 C three. We are affiliated with the Pioneer Institute, which, you know, has been around for a very long time. And we, we do what sort of the, the edge of what Pioneer Institute can do. The Pioneer Institute studies issues and issues, reports, and and encourages change and in circumstances where that change doesn’t happen, Pioneer Legal has the ability to bring lawsuits and asks the third branch to to get to the right answer on, on something. So, again, as a 5 0 1 C three, we certainly live on donations. We don’t charge legal fees and we never will. And so if the listeners are interested in making donations to us, we’re, we’re certainly more than happy to have them.

Joe Selvaggi:

Wonderful. That’s a very powerful pitch. So where can our listeners find Pioneer Legal? Is it pioneer legal.org?

Hon. Frank Bailey:

Well, they can go to our website and it’s pioneer legal.org, www.pioneer legal.org. We are, we share space with Pioneer Institute, 185 Devonshire Street in Boston. But there’s an awful lot to learn about the many things we’re doing by going to our website. And we hope people go take a look. And there is an opportunity, as always, to donate by going there. But more important, if any listener has an issue that they would like us to consider bringing you can rep report government abuse by going onto our website, and there’s an opportunity to do that, just make a click and tell us, and we’ll call you and talk it through.

Joe Selvaggi:

Well, that’s wonderful, full service. Bring us either your, your problems for us to solve or your generous donations for us to help others. So that’s, that’s a very compelling pitch. We’re at the end of our time together. I, I really appreciate your, your time, Judge Bailey, this has been wonderful information. I think it’s, it’s stimulated a lot of people to perhaps get active and find out if we can settle this once and for all, either at the state or at the federal level. This has been great. Thank you very much for joining me today. Thank you, Joe. This has been another episode of Hub Long. If you enjoy today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us. If you subscribe to Hub Won on your iTunes pod catcher, it would make it easier for others to find Hubwonk. If you offer a five star rating or a favorable review, we’re always grateful if you share Hubwonk with friends. If you have comments or suggestions or ideas for future episode topics, you’re welcome to email me at Hubwonk @ pioneer institute.org. Please join me next week for a new episode of Hubwonk.

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