Every great hero comes to a point in their journey where they find themselves down for the count—wounded, downtrodden, and doubting their ability to defeat their formidable foe.
When Pacific Legal Foundation’s communications team first met our hero, 67-year-old Deborah Foss, she was homeless in New Bedford, Massachusetts.
Deborah was in a hotel room for only a few nights—a brief and temporary retreat from the several weeks she had spent living in her car during a particularly cold Massachusetts winter.
When we knocked on the door of Deborah’s hotel room, her wife answered the door. Deborah was busy. Scattered across both hotel room beds were stacks of papers that she was furiously organizing, sifting to find a document the attorneys had told her would help her case.
Our team introduced ourselves and, despite the double masks and having just recovered from a dangerous bout of COVID, she hugged us warmly. “Thank you,” she said. “Thank you so much.”
From her accent to her demeanor, she was New Bedford personified—a dogged city built on deep-sea fishing where you are family the moment you walk through a stranger’s door.
She was kind, candid, and as quick to make fun of herself as to banter with us—not at all what you might expect from someone in her situation.
In January, Deborah had been thrown out of her home over a $3,748 unpaid property tax bill that she had attempted to pay but was told it was too late.
The government issued a tax lien (the right to receive payment on the debt) against Deborah, then sold the lien to a private real estate investment company, Tallage, for under $10,000. This gave Tallage the right to foreclose on the home and evict Deborah.
Worse still, after Tallage threw Deborah out of her home, they sold her house for $242,000 and kept every cent from the sale, even though it was worth much more than she owed. Incredibly, what Tallage did is allowed by Massachusetts tax law. But the Constitution cannot tolerate it. The Constitution requires government to pay when it takes private property, but neither the local government nor Tallage paid Deborah a dime, even though her home was worth far more than her total debt
Deborah didn’t even know that Tallage had foreclosed on her home until she received a notice informing her she had 30 days to vacate the property.
One particularly cold day right after a snowstorm, she was kicked out of her house with no place to go, all the while suffering from chronic lymphocytic leukemia, COPD, neuropathy, and recovering from COVID, for which she had been hospitalized just a couple of weeks before.
While she was relieved to eventually find PLF and work with us to sue both the government and Tallage for unconstitutionally taking more than she owed, times were tough.
Deborah didn’t know then that all the fighting and holding on would be worth it, as her story would soon get a happy ending.
Before we get to our hero’s victorious ending, let’s back up for a second and discuss how this awful situation was allowed to happen in the first place.
The government authorized Tallage to take her home, sell it, and keep all the proceeds—a practice called home equity theft.
The property tax law in Massachusetts has made this possible. And investment companies have eagerly participated in stomach-turning fashion.
When a Massachusetts resident like Deborah falls behind on their property taxes, their tax debt starts accruing interest at a steep 16%.
Some municipalities decide to collect that interest and the potential windfall and keep it for the public’s budget. Others wash their hands of such unpleasantness and sell the tax lien to a private investor like Tallage.
It is then the private investor’s privilege to collect the debt, with interest and costs, including attorney fees, and begin the foreclosure proceedings, which often yield windfall profits.
As Massachusetts Lawyers Weekly writes, “Who could resist the opportunity to buy a property tax lien title for $1,052.84, and end up owning real estate worth more than $270,000?”
In some cases, selling the lien to a private investor is particularly appealing to the government, because it takes the debt off its books. The investor also benefits by collecting interest or pocketing all the money from the sale. It’s a great deal for private investors, albeit evil.
Extraordinarily, Tallage seems almost proud of what it does, as its very name implies.
In medieval Europe, a “Tallage” was an arbitrary tax that the lord of an estate would impose on his tenants—tenants who had no freedom to oppose. The tenants never knew when the tax was coming or the amount they would be forced to pay. The lords had authority to implement the tax on a whim.
Rational minds do not look to the feudal system as the pinnacle of liberty and justice.
Deborah was lucky. Rather than go to court, Tallage offered her a settlement that would require Deborah to dismiss the case against both the company and the government.
Deborah was willing to accept the $65,000, but Tallage insisted on some additional terms.
Tallage’s proposed settlement agreement would have imposed a “gag” provision on Deborah and PLF, forbidding both from making any public or private statement about the case, Deborah’s home, or the settlement itself. Deborah would not even be allowed to discuss it with family.
It also forbade Deborah and PLF from making any statement or creating any content (social media, blog posts, etc.) that “directly or indirectly…disparages, denigrates, maligns or criticizes” Tallage.
Failure to comply with these terms would result in Deborah having to return all the settlement money.
Tallage wanted to keep Deborah and PLF quiet.
Deborah was so close to moving out of her car and putting this all behind her. But she had fought valiantly and she wasn’t going to sacrifice her right—or PLF’s right—to speak about the case for $65,000. Her integrity was worth more and she deserved more.
She refused the deal.
Tallage then tried to argue that when she agreed to accept $65,000, she had bound herself to accept the settlement. But no paperwork had been signed, and Deborah and Tallage never agreed on a settlement. To add insult to injury, Tallage even asked the court to force Deborah to pay their lawyer fees.
The judge wasn’t buying it:
“The record further reveals that Tallage’s effort to restrict PLF’s ability to publicize the litigation was especially significant given the nature of PLF’s legal practice and Foss’s interest in publicizing the circumstances of her housing predicament.
According to Attorney Polk, part of PLF’s mission is ‘to end predatory tax foreclosure laws that allow government or its private partners to take homes and all equity in those homes as payment for smaller debts.’”
“PLF and Foss maintain that the proposed confidentiality and non-disparagement provisions would limit their ability to persuade the public and policymakers to protect indebted homeowners from predatory tax foreclosures by keeping them from using Foss’s story to promote their broader interests. Accordingly, this court is compelled to conclude that the parties never reached agreement on all essential terms of a contract and that Tallage’s motion to enforce a settlement agreement must be denied.”
Fortunately, the court agreed with Deborah.
And Deborah agreed to settle her case for $85,000. In addition, she and PLF are free to speak about her case, meaning that Deborah’s story will contribute to PLF’s ongoing efforts to bring an end to the unconscionable tax foreclosure system.
Few people would sacrifice $65,000 if it meant improving a very dire living situation. But Deborah is a fighter and PLF was relentless in our commitment to uphold her right to her property and to tell her story.
With our powers combined, we held out for something better.
Deborah is not the only person we are fighting for. There are other families that have found themselves at the whim of investors like Tallage and the government. (PLF just filed two petitions in the U.S. Supreme Court on behalf of people like Deborah.)
And until the government is forced to end the unconstitutional practice of home equity theft, they will be able to keep preying on other families under the auspices of state law.
But they won’t get away with it so easily. PLF will be watching and waiting to make sure justice is upheld and individual property protected.