Budget included concerning tax title changes

The fiscal 2025 state budget signed by Gov. Maura Healey on July 29 included changes to the tax title foreclosure process that were intended to bring the state into compliance with a 2023 U.S. Supreme Court ruling on the issue.

In Tyler vs. Hennepin County, the Supreme Court ruled that municipalities, in resolving a tax foreclosure, cannot retain equity beyond the taxes and penalties owed.

The new regulations, scheduled to take effect on Nov. 1, would:
• Be retroactive to May 2021 — two years before the Tyler ruling — allowing individuals to pursue claims against municipalities going back to that date
• Reduce the interest rate in tax title from 16% to 8%
• Require municipalities to post notice on a delinquent property by a constable or sheriff due to trespass laws
• Require municipalities that choose to sell a foreclosed property to enlist a real estate agent for at least one year before being allowed to sell the property at public auction, and require auction bids to be at least two-thirds of the appraised value in order to be accepted

In the absence of claimants, excess equity would need to be turned over to the state’s Unclaimed Property Division.

The MMA had strongly opposed the language included in the budget as overly burdensome and creating significant financial liability, and asked the governor to veto this section of the bill.

“Since the Tyler decision, the MMA has been working closely with the Legislature to find a legislative solution that would put Massachusetts in compliance with the federal ruling, while also not overburdening municipalities with cumbersome and unnecessary regulations,” the MMA wrote. “Unfortunately … outside sections [to the budget] were adopted that go well beyond adhering to the Tyler decision, and would negatively impact cities and towns.

“Despite having followed existing law at that time, cities and towns would be financially liable for excess equity claims. … Increased financial exposure to excess equity claims would come at the expense of property taxpayers in good standing. With tight municipal budgets in virtually every municipality, this type of financial exposure would likely translate into reductions in programs and services, reductions in staff, and/or increases in property taxes.”

The MMA has pointed out that cities and towns have a long track record of efforts to resolve delinquent tax cases amicably, and of working with property owners who have fallen on difficult times.