House Passes Home Equity and Tax Fairness Legislation

JUNE 30, 2024

Representative Mike Connolly joined his Cambridge and Somerville colleagues in the House to pass H.4791, An Act relative to municipal tax lien procedures and protections for property owners in the Commonwealth. This legislation will align Massachusetts law with a recent decision by the U.S. Supreme Court that secures the rights of property owners to reclaim excess equity after all taxes and fees are repaid to municipalities following a tax foreclosure, while substantially increasing notifications and other protections for property owners throughout the foreclosure process.  

"When homeowners fall on hard times, it’s unconscionable that municipalities have been able to extract millions of dollars in value above and beyond any unpaid taxes. That’s why I was glad to vote for restoring tax fairness last week, as we abolish the unfair process by which cities and towns can seize equity from vulnerable homeowners," Rep. Connolly said. "This legislation ensures due process for vulnerable taxpayers and provides a more equitable process for resolving tax delinquencies."

Last year, the United States Supreme Court ruled in Tyler v. Hennepin County, Minnesota that state laws allowing municipalities to retain equity from a foreclosed property, in excess of any taxes and fees owed by a property owner, are unconstitutional under the Takings Clause of the Fifth Amendment of the U.S. Constitution. This ruling had an impact on the municipal tax lien foreclosure process in the Commonwealth, since Massachusetts law also allows municipalities or third parties that purchased tax liens to keep excess equity following a property foreclosure for unpaid taxes. Underscoring the need for legislative action, a recent ruling by the Massachusetts Superior Court (Ashley M. Mills v. City of Springfield) found that the property foreclosure process in Massachusetts was unconstitutional, a ruling that was supported by legal briefings from the Massachusetts Attorney General’s Office.  

This bill ensures that Massachusetts law is constitutional throughout all municipalities in the Commonwealth and fair to those subject to municipal tax lien foreclosure proceedings. This legislation does the following: 

  • Requires that a detailed accounting be taken following a foreclosure in a tax taking of the excess equity that is available;
  • Any excess equity must be returned to the former owner within 60 days;
  • Allows for retroactive claims for excess equity from May 25, 2023, until date of passage;
  • Updates notice requirements where the subject property is residential;
  • Allows former owners the opportunity to file a claim in Superior Court if there is a dispute on the amount of excess equity owed;
  • Increases the maximum length for repayment agreements for owed taxes from five to 10 years;
  • Decrease the amount for a down payment for the repayment agreements from 25 percent to 10 percent and;
  • Establishes a special commission to conduct a comprehensive study relative to the current law and practices around the collection of delinquent property tax revenue by municipalities in the Commonwealth.

Having passed the House of Representatives 154-0, the bill now goes to the Senate for its consideration.