Editor’s Note: What many call “Home Equity Theft” was the law in about a dozen US states prior to the SCOTUS ruling in May in the case of Tyler v. Hennepin County. Now, those states are facing similar issues in which state law and the SCOTUS decision are in opposition to one another. New England Legal Foundation Staff Attorney John Pagliaro is the principal author of the advisory mentioned in this news release.
FOR IMMEDIATE RELEASE 12-04-2023
CONTACT:
Burt Peretsky, <peretsky@gmail.com>, 781-696-5579
Supreme Court Ruling Against Home Equity Theft Continues to Roil State Courts
NELF Files a Brief to Assist the Massachusetts Land Court in Dealing
With the Aftermath of the US Supreme Court’s Decision in Tyler
BOSTON – The Massachusetts Land Court finds itself in a quandary that the New England Legal Foundation (NELF – www.newenglandlegal.org) helped to create. Earlier this year, the US Supreme Court issued its decision in Tyler v. Hennepin County, 598 U.S. 631 (2023), a Minnesota tax case in which NELF filed an earlier amicus friend-of-the-court brief supporting the taxpayer. The Supreme Court held that when property is taken to pay delinquent taxes, any value above the tax belongs to the taxpayer and cannot be kept by the government. Like the law of some other states, Massachusetts law has long permitted government to keep the entire value of the property. To do so is now unconstitutional.
In a tax case called Town of Tyngsborough v. Recco, the Land Court justice asked NELF and several others to advise whether there may be a way for it to serve two masters, i.e., Tyler and current state law. Can it foreclose on the property and pass title to the town without denying the taxpayer her right to her home equity?
In its brief, NELF suggests a way. It notes that one isolated sentence in the law is responsible for government’s obtaining the unconstitutional “absolute” title. NELF calls attention to the Court’s statutory duty to try to save partly unconstitutional statutes if possible. NELF argues that the sentence may permissibly be severed because to do so would not harm the rest of the statute or related statutes. With the sentence gone, the town would be able to obtain (non-absolute) title and sell the property for the taxes, while the Court could rule that the taxpayer retains an enforceable equitable interest in all sale proceeds above the taxes.
NELF emphasizes that the severance, so far from re-writing the law, would accomplish the state Legislature’s two prime purposes of facilitating the collection of delinquent taxes while protecting the interests of the taxpayer.
NELF President Dan Winslow commented, “Cities and towns need the ability to collect and enforce payment of local taxes to pay for important services like police, firefighters and teachers. But such enforcement must respect the property rights of homeowners by preserving home equity value once all taxes are paid. NELF’s proposed approach solves the issue in Massachusetts.”
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About the New England Legal Foundation
Founded in 1977, the New England Legal Foundation (NELF – www.newenglandlegal.org) is the leading non-partisan, non-profit public interest law firm in the region dedicated to economic liberty. NELF’s ongoing mission is to champion free enterprise, property rights, limited government based on rule of law, and inclusive economic growth. We believe that free enterprise is a foundational value of a democratic society and the best opportunity for people to lift themselves to prosperity.