By Bob Katzen

The House 154-0, approved and sent to the Senate a measure that would prohibit cities and towns that foreclose on properties on which the owner owes back property taxes, from keeping all of the profits when the city or town sells the property at auction. Current Massachusetts law allows this practice. The bill would allow the city or town to keep only the amount owed in back taxes and send the remainder to the owner.

Last year, the United States Supreme Court ruled that cities and towns that foreclose on properties on which the owner owes back property taxes, cannot keep all of the profits when the city or town sells the property at auction. Supreme Court Chief Justice John Roberts, writing a unanimous decision about a similar Minnesota law, said that “a taxpayer who loses her $40,000 house to the state to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed.”

“This legislation provides much needed consumer protections to property owners and clarity to municipalities on tax lien procedures,” said Rep. Mark Cusack (D-Braintree), House Chair of the Committee on Revenue. “Equity will now be returned to its rightful owner while making cities and towns whole.”

The bill was based on earlier versions of the measure sponsored by Reps. John Mahoney (D-Worcester), Tram Nguyen (D-Andover) and Jeff Roy (D-Franklin),

“For far too long, unscrupulous collectors have taken advantage of Massachusetts homeowners in foreclosure,” said Mahoney. “This legislation rectifies this systematic problem once and for all. By protecting the hard-earned equity of our neighbors, while balancing the needs of cities and towns, we can stifle the corruption of bad-faith lienholders and make the commonwealth a more prosperous place for working families.

“The best way for property owners to keep the equity in their homes, is for them to keep their homes,” said Nguyen. “This bill protects homeowners by providing better notices in the municipal tax lien process and presenting opportunities to cure deficiencies.”

“Today’s vote by the Legislature makes the tax taking process more just and erases the patently unfair and unconstitutional processes used to rob homeowners of their home’s equity built over years,” said Roy. “The bill enhances due process protections which will ensure that a homeowner receives adequate notice and affirms their right and opportunity to claim that equity. Moreover, this significant legislative step provides homeowners with an equitable process for resolving tax delinquencies and rectifies constitutional problems with the current law.”

(A “Yes” vote is for the bill.)

Rep. Christine Barber Yes Rep. Mike Connolly Yes Rep. Paul Donato Yes Rep. Erika Uyterhoeven Yes