Failing to pay Massachusetts property taxes may lead to significant consequences for property owners, including the taking of a tax title to their home. In many cases, however, the law provides a way for individuals to reclaim ownership. In an April 17, 2019 case before the Massachusetts Land Court, the homeowners sought to determine the amount needed to redeem property that had been taken for nonpayment of taxes. The plaintiff in the case was a private company that held the tax title from their house. The plaintiff argued that the redemption amount must include the sum of tax payments that it had made since acquiring title, as well as 16% interest on that amount.
The problem arose in 2011, when the City took title to the defendants’ house pursuant to Massachusetts law, as the defendants had not paid their real estate taxes on the property that year. The law allows the City to hold title until the defendants exercise their right of redemption, or until they no longer possess the right of redemption. During that time, the accrued interest rate on the defendants’ redemption amount (i.e., unpaid taxes, fees, costs, etc.) is 16%.
In 2016, the plaintiff purchased the tax title from the City at auction. The plaintiff paid the City the outstanding taxes on the defendants’ property and continued to pay the taxes on the property for the next three years. The plaintiff subsequently initiated foreclosure proceedings against the defendants, who answered the complaint by claiming the right to redeem title to the property. The plaintiff argued that the redemption amount should include the following: unpaid taxes for 2011 through 2015 plus interest and fees, the subsequent taxes paid by the plaintiff from 2016 to 2018, and interest at 16% on that amount. The defendants agreed to the unpaid taxes for 2011-2015, but argued that the plaintiff had no authority to claim the other amounts under the statute.
The statute under which the plaintiff acquired tax title did not specifically address either of the issues. Accordingly, the Land Court analyzed the language and history of the legislation to determine whether assignees of tax title stand in the place of the City and may therefore claim the same benefits, i.e., to recover paid taxes and interests by adding them to the redemption amount.
The Land Court ultimately concluded that the relevant statutes did not give the plaintiff the right to include the subsequently paid taxes and interest in the redemption amount. The court went on to find that the plaintiff’s rights to collect were governed under a different statute, which limited the plaintiff to filing a tax lien on the property and did not allow for the collection of accrued interest. Accordingly, the court excluded same from the redemption amount required for the defendants to reclaim clear title to their property.
At Pulgini & Norton, we handle legal matters involving the residential real estate of property owners and buyers. Our Massachusetts property attorneys can assist you with a tax lien issue, home financing and mortgage concerns, permit and variance applications, and other residential property transactions. Request a free consultation with a real estate attorney by calling Pulgini & Norton at 781-843-2200 or completing our online contact form today.