GREENFIELD — The city will initiate the tax title taking process on 41 properties this week, a practice that — in the small number of cases that lead to foreclosure — has been dubbed “home equity theft” by opponents.
“In Massachusetts, when a property is foreclosed — no matter how small the debt and no matter how valuable the property — the foreclosing entity gets to keep the title of the home, and nothing is returned to the original property owner,” said Joshua Polk, an attorney at Pacific Legal Foundation who practices in the area of economic liberty and property rights. “That’s resulted in some truly egregious examples.”
In the April 15 edition of the Greenfield Recorder, 41 properties were listed in a legal notice announcing the city’s intention to “take for Greenfield … for non-payment after demand, of the taxes due thereon, with interest and all incidental expenses to the date of taking, unless the same shall have been paid before the date.”
Tax Collector Kelly Varner explained that when a property owner doesn’t pay taxes for the previous fiscal year, the city sends a demand notice at the end of the current one. Two subsequent letters are sent after that, advising the owner to make the necessary payments to prevent the start of the tax title process.
“We actually give them a long time … to pay off their taxes,” she said, noting taxpayers often have up to a year to pay off the amount owed.
“After their two notices, we have to advertise them in the paper,” Varner explained. “At that point, the city puts a lien on the property. … We try to work with people to find some means to pay their bill. In a lot of instances, people ignore us.”
Varner explained that the city will work with property owners who may not be aware of abatements for which they qualify. She noted there are also state programs — particularly now, because of the pandemic — that will help people pay their taxes.
“We also try to get them on a payment plan if none of those things seem to work,” she said. “We give them three years — a 36-month payment plan — to get their taxes paid. Ideally, that’s what we’d like to do, but not everyone wants to go that route.”
Varner said she is also looking into a new program, the Massachusetts Homeowners Assistance Fund, that will help people pay mortgages, taxes, and water and sewer bills, for example.
“We work with everyone … and point them in the direction of assistance that might be available,” she said.
Of the properties listed in the legal notice, Varner noted a few of them have seemingly small tax payments due. She explained the amounts displayed in that listing are solely for fiscal year 2021.
“All of those people haven’t paid for their 2022 taxes either, so it’s not like that’s the total owed to the city,” she said.
Additionally, two properties at 393 Main St., where Greenfield Community Television’s offices are located, were included in the listing. She said this was a result of GCTV not filing the necessary tax-exempt paperwork. A vendor for the Assessor’s Office explained that GCTV has initiated a conversation with the Board of Assessors about rectifying this, but at the moment GCTV is still responsible for paying the taxes owed.
Compared to the 41 properties listed for fiscal year 2022, Varner said typically the city begins the tax title taking process on as many as 60 or 70 homes each year. In nearly all cases, the city doesn’t end up foreclosing on the properties.
“There are a few houses we’ve sold that we’ve made money on, but in very rare instances do we make money,” she said. “Most of the time, they’re in very poor shape. … A lot of people think the town is making windfalls, but that’s not the case.”
In the last three years, three properties have been sold at auction, according to Varner.
Typically, “They find a way to pay or they sell the property,” she said, adding it can be years before the process reaches the point of foreclosure.
But even if it’s a minority of properties that are foreclosed on, Polk said it amounts to “a significant amount of equity.”
“In a single year, [Massachusetts] homeowners lost $56 million of equity,” Polk said, referencing research by Professor Ralph Clifford of University of Massachusetts Dartmouth Law School.
In the case of a property foreclosure — which Polk acknowledged happens rarely — municipalities are legally entitled to not only the taxes owed and interest, but the title of the home.
“Nothing is returned to the original property owner,” he said.
Polk referenced a case in Massachusetts involving a client who owed roughly $30,000 by the time of foreclosure.
“Her property was foreclosed and taken,” he said, adding the property was sold at auction for $242,000. “She was left with absolutely nothing and is currently homeless.”
Massachusetts is currently in a minority of states that have this practice, according to Polk. Most states, instead, go through traditional mortgage sale practices, in which tax-delinquent property is sold and the remaining proceeds are returned to the original property owner.
“People don’t pay their taxes for a variety of reasons,” he said. “It’s rarely just because they don’t feel like it.”
At the state level, legislators are trying to address this, he said. A bill, H 353, would improve the notice procedures for people undergoing tax foreclosure proceedings and also guarantee that any excess proceeds generated by tax sales are returned to the original property owner.
“That would just bring Massachusetts in line with the vast majority of states,” Polk said.
Varner emphasized that the city isn’t “out to get anybody.”
“Our job is to make sure the city is whole, and we utilize the laws to try and do that,” she said. “It’s not fair for you to pay your taxes and your neighbor not to, because that puts the burden on everyone else.”
Reporter Mary Byrne can be reached at mbyrne@recorder.com or 413-930-4429. Twitter: @MaryEByrne.
