The first time Mark Mucciaccio of South Easton, Mass., remembers hearing of Tallage Lincoln LLC was when he learned the real estate investment company had taken his longtime family home out from under him.
Mucciaccio isn’t alone. Numerous Bay State homeowners have ended up in the crosshairs of real estate players working with government agencies to seize and sell off tax-delinquent properties. They keep any profit, leaving the original owners with nothing.
This predatory practice is legal in Massachusetts — at least for now. But that could soon change, thanks to leadership from state lawmakers seeking to end questionable tax-forfeiture sales.
In most states, tax foreclosures are reasonably straightforward. If you fail to pay your property taxes, state or local officials can seize and sell the property at auction to satisfy the tax debt (plus associated interest and fees). Once that debt is satisfied, the remaining proceeds are returned to the original owner to compensate them for their equity in the property.
But in Massachusetts, officials skip this crucial last step. Instead, they take the whole house as payment for the tax debt — no matter how valuable the house or how small the debt. Some municipalities keep the windfall. Others give the power to take the house to a private investor who then can pocket the profit. Regardless of how much equity the homeowner may have built up in their property, they’re left with nothing. Massachusetts is one of a dozen states where this sketchy practice remains legal.
The Mucciaccio family’s case is a textbook illustration of how the scheme works. When their mother died in 2006, Mark and his brother inherited her home, which had been in the family for 57 years. But in November 2020, a real estate agent showed up unannounced, thinking the house would be vacant, to change the locks. (Mark Mucciaccio shares his story here.)
They learned the house no longer belonged to them. In fact, they hadn’t owned the home since July 2019, when the Massachusetts Land Court handed the title to Tallage Lincoln. Tallage sent foreclosure notices, but the Mucciaccios don’t recall receiving them, perhaps because they were full of dense legal language difficult for a layman to comprehend.
The Mucciaccios owed $3,982 in back taxes and it wasn’t the first time they’d fallen behind, resulting from financial hardship because of family members struggling with health issues. But even though they sometimes paid late, they always managed to pay what they owed. Had they realized they would lose the home, Mucciaccio says, they’d have found a way to pay the debt more quickly.
In June 2017, town officials sold the tax lien to Tallage, which gave the company the right to collect the debt with interest and permission to take the home if the Mucciaccios didn’t pay on time. A month later, Tallage started foreclosure proceedings on the home, a property valued at $287,000. Consistent with Massachusetts law, the court awarded the title to Tallage — over a lien of less than $4,000. The Mucciaccio family got nothing back, despite having built up equity in the property for decades.
This is a common outcome in such cases. A Pacific Legal Foundation (PLF) study found that homeowners subjected to tax foreclosures lose more than 87 percent of their home equity. And unsurprisingly, the people most affected by these foreclosures are society’s most vulnerable — seniors on fixed incomes and people with health issues — who have fewer resources to defend themselves. And as in the Mucciaccios’ situation, most of these property owners fail to realize their homes are in jeopardy until it’s too late.
Compared to others who have fallen victim to such tax foreclosures, the Mucciaccios were fortunate in the end. PLF helped them fight back in court and Tallage relented, allowing the family to pay their debt and redeem the title to the home. But vulnerable homeowners need greater protection from predatory tax foreclosure laws.
The good news is that Massachusetts lawmakers have introduced a bill to reform these seizures and ensure that homeowners are appropriately compensated for their equity value. Investment companies and local governments soon may find they no longer can profit off vulnerable property owners.
Property owners must pay their taxes, and those who fail to do so ultimately may face foreclosure proceedings. But the Constitution and justice require the government — or private companies deputized by the government to collect taxes — to compensate them for the equity in their homes. Here’s hoping that Massachusetts is the next state where home equity theft becomes a thing of the past.
This op-ed was originally published at The Hill on August 29, 2022.