After a state judge ruled this month that Massachusetts law governing municipal home equity takings “requires Legislative correction,” a state senator who has filed a related bill for years said Monday that he was ready to start demanding roll call votes on his proposal.

Members of the Legislature’s taxation panel began voting Monday afternoon on a redrafted version of Sen. Mark Montigny’s bill (S 1876), which the New Bedford Democrat said he filed to protect homeowners from so-called “equity theft.”

Since he first filed the bill in 2018, the issue has grabbed more headlines following the U.S. Supreme Court’s ruling almost a year ago that a state law in Minnesota violated the U.S. Constitution’s takings clause.

The Massachusetts law known as Chapter 60 allows a city or town to foreclose on a person’s house to pay a tax debt, then keep the full value of the real estate beyond the amount of the debt.

Judge Michael Callan of the Hampden County Superior Court ruled on April 18 that that practice violates both Article 10 of the Massachusetts Constitution’s Declaration of Rights and the Fifth Amendment to the U.S. Constitution.

“The statutory scheme, in its present form, is untenable and requires Legislative correction,” Callan wrote.

The Joint Committee on Revenue vote is set to end at 3 p.m. Tuesday on a redraft of Montigny’s bill. Committee members faced a February deadline to vote on the bill, but have been operating on an extended April 30 deadline to wrap up their consideration of the proposal. Neither a copy of the revised text nor a summary was available from a committee aide on Monday.

Regardless of the committee vote outcome, Montigny told the News Service he was “feeling so angry on this one,” felt the bill “should have been done a year ago,” and was ready to try to force the issue on the chamber floor.

“I reserve my right to call a roll call and to attach it to any document flying through the Legislature that looks like it’s got a better chance of getting to the governor’s desk before the end of the session,” Montigny said.

He said he may seek to sew his bill’s language into “a budget document, a supp document, an economic development bill – anything that ensures that this is not just sitting in the next committee process, or in one branch or the other, and not disposed of.”

In the Hampden County case filed last October, Springfield resident Ashley Mills challenged Chapter 60’s constitutionality in an “action for injunctive and declaratory relief” against the City of Springfield and city tax collector Stephen Lonergan.

After an initial unpaid 2016 tax bill of $1,636.70, her debt to the city ballooned through interest and fees to around $22,000 – and Mills found herself “on the verge of losing” her home, according to the Pioneer Public Interest Law Center, which represented her along with Greater Boston Legal Services.

Mills is 26, inherited the house from her grandmother, and lives with her two-year-old son and disabled mother, according to the law center.

Under Chapter 60, a city or town can foreclose on a home for unpaid tax debt – then keep the entire value of the real estate. In Mills’ case, that meant potentially losing a home whose sale price is estimated on Zillow at $227,000.

Callan found that because Chapter 60 does not outline a way for the homeowner to recover the surplus value, the practice by municipalities violates Article 10 of the Mass. Declaration of Rights and the Fifth Amendment to the U.S. Constitution.

“The law is clear that, if Ms. Mills’ right of redemption is foreclosed, she will lose her entire interest in the home, including the value of the home exceeding the amount due to Springfield,” Callan wrote in his ruling.  He added, “The statutory scheme is not facially unconstitutional because, of course, there are circumstances where the tax debt (including interest) exceeds or equals the value of the property.  It is, however, unconstitutional as applied in circumstances, such as here, where the tax debt is less than the value of the property.”

Nominated to the Superior Court in 2016 by Gov. Charlie Baker, Callan formerly served as town counsel to Longmeadow, Ludlow, and Hampden.

The case was initially filed in the Supreme Judicial Court. SJC Justice Serge Georges ordered it transferred last October to the Hampden County Superior Court.

“This is primarily a legislative issue,” attorney Todd Kaplan of Greater Boston Legal Services said in a statement after this month’s ruling.

Charlie Chieppo from the Pioneer Law Center said the situation was “pretty clear” and called for “basic fairness.”

“Judge Callan simply reinforced … the Supreme Court case on the same topic from Minnesota,” Chieppo said. “And Minnesota had the same law essentially that Massachusetts does. … I think the Legislature just needs to look at those two cases, and just write a piece of legislation that conforms with those two cases. That just says that OK, if you want to take somebody’s home for a tax debt, that’s fine. But once the tax debt is paid, the homeowner needs to get the balance of the value of the home.”

In last year’s U.S. Supreme Court decision, Tyler v. Hennepin County, Chief Justice John Roberts wrote on behalf of the unanimous court: “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. The taxpayer must render unto Caesar what is Caesar’s, but no more.”

Montigny said he has not heard any opposition to his six-year-old bill “other than the dirty hands of the law firm who makes lots of money, and the dirty hands of the mayors and select men and women who actually have engaged in the practice.”

“No matter what, and court cases will continue to come up, and they’ll continue to lose,” the New Bedford Democrat said Monday. “But the Legislature is charged with fixing things if the state is out of line with the federal or state Constitution. So this bill could have, and should have, been done a year ago. And now we’ll see.”

Montigny’s bill was cosponsored by a bipartisan group ranging from top Republican Sen. Bruce Tarr to progressive Democrat Sen. James Eldridge.  Other cosponsors include Reps. Christopher Markey, Antonio Cabral, Christopher Hendricks, Susannah Whipps, Lindsay Sabadosa, and Adam Scanlon, and Sens. Walter Timilty, John Keenan, Michael Moore, and Lydia Edwards.

Edwards, Moore, Markey and Whipps are members of the Revenue Committee, which is co-chaired by Rep. Mark Cusack of Braintree and Sen. Susan Moran of Falmouth.

Court Rulings May Force Action On Home Equity Theft

by Banker & Tradesman time to read: 4 min