Category: Civil Litigation
Evaluating Massachusetts’ Tax Lien Foreclosure Laws Post Tyler v. Hennepin County
Last term, in Tyler v. Hennepin County, the Supreme Court ruled Minnesota’s tax lien foreclosure scheme unconstitutional, in violation of both the Fifth Amendment’s Takings Clause and the Eighth Amendment’s Excessive Fines Clause. Minnesota is one of twelve states, in addition to the District of Columbia, with tax lien foreclosure statutes. Sometimes referred to as “tax and take seizures” or “home equity theft,” these laws differ significantly from a typical bank foreclosure proceeding in which a homeowner can only lose equity already owed as debt. By contrast, foreclosure under tax lien laws can result in a homeowner losing the entire value of their home—often a financial loss multitudes greater than what the homeowner actually owed. Massachusetts is among the states that permit this practice. In the wake of the Tyler ruling, whether the law can or should remain on the books is worth examining.
Ms. Geraldine Tyler
In Tyler, Geraldine Tyler owed $15,000 in property taxes, but when Hennepin County foreclosed on her home and sold it for $40,000, it was able to keep the $25,000 balance of her equity. As Chief Justice John Roberts said, writing for a unanimous court, “The taxpayer must render unto Caesar what is Caesar’s, but no more.”
Massachusetts’ tax lien foreclosure law, found in Chapter 60, was passed in 1996 amidst a statewide budget crisis. According to Dan Bosely, the former legislator who wrote the law, it seemed like a creative revenue generator at the time, a way to help communities recoup lost revenue when people were not paying their real estate taxes or water and sewer bills. But the practice has been widely criticized by consumer advocates, and according to professors and lawyers familiar with tax lien laws across the country, the industry targets those in distress, mostly elderly and poor homeowners. According to Joshua Polk, an attorney with the Pacific Legal Foundation who has litigated three Massachusetts-based cases, “It’s a transfer of wealth from the poorest people to either government entities or extremely wealthy investors.” In 2018, Bosely himself expressed concern about the consequences of the legislation. From 2014 to 2021, Massachusetts residents subject to tax lien foreclosure lost 82% of their home equity, which amounted to an average loss of $172,000 per homeowner.
Under the current Massachusetts law, a municipality can take control of a property itself or sell the right to foreclose to a private buyer. In the past decade, one Boston based investment company, Tallage Inc., has purchased two thousand tax liens from thirty cities and towns. According to Tallage’s general counsel, the company is acting in the public good, helping recoup lost revenue needed to pay for public schools, police stations, and firefighters. In fact, cash-strapped cities such as Worcester, Lowell, New Bedford, Pittsfield, and Quincy use tax lien foreclosures more often, likely due to a dire need to fill city coffers. However, whether thrusting people into more acute financial precarity or homelessness might not also have collateral consequences for a city’s bottom line seems worth examining. Further, when these third-party intermediaries are involved, private investors such as Tallage, not the municipality and its taxpayers, reap the lion’s share of the financial payout.
In the wake of the Tyler ruling, an editorial in the Boston Globe urged Massachusetts to use this moment to reform its tax foreclosure laws: “Protecting the rights of homeowners ought to be part of any future legislative housing package.” Whether Tyler by itself invalidates the Massachusetts law is a different question. Unlike in Minnesota, Massachusetts tax foreclosures often happen through intermediaries like Tallage, making the government’s role more attenuated and thus potentially less dubious as a constitutional matter. Further, all Massachusetts tax foreclosures go through a Land Court hearing, at which, per a 2016 ruling, an owner may request a judicial sale to retain their equity in the property. Whether this provides any extra measure of protection is questionable though, as many individuals facing foreclosure may be unaware of these rights and unable to obtain legal counsel. Regardless of whether these procedural differences actually afford homeowners any more substantive protections, they are enough—from Tallage’s perspective—to place Massachusetts’ law squarely outside the scope of Tyler’s ruling.
To others, Tyler provides a clear mandate to change Massachusetts’ current statutory scheme. During a hearing of the Joint Committee on Revenue in June 2023, First Assistant Attorney General Pat Moore called the Massachusetts law a “classic unconstitutional taking,” undistinguishable from the one the Supreme Court just struck down. A case winding its way through the Massachusetts courts—in which a Worcester woman stands to lose $250,000 over a $2,600 unpaid tax bill—may soon clarify whether the judiciary will permit the practice to continue throughout the commonwealth.
Even if the Massachusetts courts find the Chapter 60 provisions distinguishable from those at issue in Tyler, the practice is problematic and the legislature should take action. According to UMass law professor Ralph Clifford, municipalities collect an average of $50 for every $1 of delinquent real estate owed. Raising revenue off the backs of a state’s poorest and medically compromised citizens and depriving them of the equity they have built up over years, even if constitutional, is surely unsound policy.
The Massachusetts State House
Boston, 1787
In February, 2023 Rep. Jeffrey Roy (D-Franklin) and Rep. Tommy Vitolo (D-Brookline) introduced H. 2937, “An act relative to tax deeds and protecting equity for homeowners facing foreclosure.” This bill would bring the law surrounding tax lien foreclosures in line with that governing mortgage foreclosures: a municipality would still have license to sell a property burdened by unpaid tax debt, but additional money from the sale, beyond the debt owed, would be returned to the homeowner. Another bill, H.2907, filed by Rep. Tram Nguyen (D-Andover), addresses concerns surrounding notice. While towns are required to provide written notice to homeowners at risk of tax foreclosure, the requirement is minimal and, given contemporary realities of how information is consumed, inadequate. According to a legal aid lawyer familiar with these cases, “Maybe [the requirements] made sense 100 year ago when people got their information from going to town hall or the post office, or from a newspaper…but in the context of our world today, using those procedures is calculated not to give notice, but to hide it from people.” H.2907 would require notice be understandable to an unsophisticated consumer. Given that those affected by tax lien foreclosures are usually elderly, medically compromised, or without the resources to hire an attorney, such enhanced procedural safeguards seem prudent.
Massachusetts legislators have filed bills addressing these issues in the past. With Tyler shining a national spotlight on this issue, advocates are hopeful the moment is ripe for reform. The legislature should not wait for the courts to take action in the wake of Tyler. Regardless of whether the current scheme passes constitutional muster from the perspective of the judiciary, real policy concerns with the statutory scheme have been exposed. The legislature has itself deemed, per Mass. Gen. Laws ch. 93, § 46, that a practice need not be illegal to be an unfair and unreasonable manner of debt collection. Legislators should seize on this moment to act as independent constitutional actors and pass the aforementioned legislation. Further, any reform regarding these laws would be remiss not to provide remedial measures for those who have already suffered injury due to this predatory practice.
Edie Leghorn anticipates graduating from Boston University School of Law in May 2025.
Right to Counsel in Eviction Cases: A California Case Study
Housing courts are overburdened. Tenants do not know their rights and are rarely represented. And as a consequence, many people lose their homes. To address these failings, some advocates call for “Civil Gideon.” The famous Supreme Court case, Gideon v. Wainwright held that the Sixth Amendment right to counsel requires the government to appoint counsel for indigent criminal defendants, at no cost to the defendant. Since Gideon, some advocates have called for Civil Gideon, or the right to counsel in civil cases. The movement has now, more accurately, deemed the 
idea “right to counsel” because it does not suggest that the government should appoint counsel for all civil litigants and advocates do not wish to replicate the indigent defense system’s flaws. Instead, the intended scope for the right to counsel movement is civil cases concerning basic human needs like housing, safety, and custody. The argument is simple. If someone is entitled to free legal representation when they are charged with a minor crime that carries little to no prison time, they should also be entitled to legal representation when their housing or child could be taken from them. Here, I specifically focus on right to counsel in housing cases as a solution to the housing crisis and the current disfunction of housing court. California’s Shriver program provides a case study to evaluate one right to counsel program.
The Need
There is a lot at stake in housing court. Tenants can lose their homes and find themselves homeless or forced to move into overcrowded housing. And an eviction makes it harder to find housing down the road. Therefore, it is a serious problem that roughly 90% of landlords in housing court are represented by legal counsel, while 90% of tenants are not represented by legal counsel. Individuals who cannot afford to pay an attorney may find themselves in court more often than they expect. Data suggests that low-income households are more likely than wealthier households to face legal problems.
A Smart Investment
Evictions are expensive—both for tenants and the state. Therefore, it makes sound economic sense to invest in preserving tenancies. A Boston Bar Association study found that for every dollar Massachusetts spent on representation for people in housing court, the state would save $2.69 in other services like emergency shelter, health care, foster care, and law enforcement.
Existing Programs
Currently, eight states have some qualified appointment of counsel in eviction cases. To view which states have programs to provide counsel for at least some of their tenants, visit http://civilrighttocounsel.org/map and select subject area “housing- evictions.” Note that some states are highlighted due to city-run programs in their state. Also, note that Massachusetts is highlighted as having a qualified appointment of counsel, but this right is very limited and arose out of a case where there was a parallel criminal case pending.
California Case Study
California State Capitol
Sacramento
By: Wingsdomain Art & Photography
In 2009, the California legislature passed the Sargent Shriver Civil Counsel Act (AB 590), which set up right to counsel pilot programs. California made the program permanent in 2016 after measured success. Through the Shriver program, nonprofit legal services organizations provided legal services for pro se low-income parties in civil matters that involved issues of housing, child custody, domestic violence, and other critical issues. Here, I analyze its services in eviction cases. In housing matters, a little over half of the clients served received full legal representation, while the rest received unbundled services like brief counsel or help filing an answer. The program also established court-based services like mediation services. With full representation, cases were more likely to settle and not go to trial, and while most clients still moved out of their homes, fewer had formal evictions entered against them and more found stable housing afterwards.
Three of the Shriver pilot programs participated in a random assignment study in 2015 and 2016. The goal was to see if the program truly was causing better results. A randomly selected group of tenants who met income eligibility criteria and faces a landlord with an attorney received full representation by a Shriver attorney. The other group received no legal services. While it is unfortunate that the program could not help all who qualified, this study provided a unique opportunity to assess the program. The defenses that tenants raised demonstrated a stark contrast between represented and unrepresented tenants. For example, 84% of the represented tenants raised the defense of defective notice, while only 28% of unrepresented tenants did the same, and 65% of represented tenants raised a habitability defense, while 37% of unrepresented tenants did so. Shriver-represented tenants also settled more often and avoided trial—67% of represented tenants settled and only 3% went to trial, while 34% of unrepresented tenants settled and 14% went to trial. However, Shriver fell short when it came to the ultimate goal: keeping tenants in their homes. In both groups, 75% of landlords were awarded possession. This finding casts doubt on the program’s efficacy. Yet, when tenants had to move out, those with Shriver representation had, on average, two weeks longer to move out. Additionally, represented tenants saved money, as they were less likely to be ordered to pay the landlord. Shriver-represented tenants were also more likely to receive favorable terms like the landlord agreeing to give neutral references or not report the case to credit agencies.
Shriver staff’s accounts of the challenges they encountered show where other programs may improve upon Shriver’s model. Shriver staff reported that their clients frequently needed other social services and found themselves acting as untrained “semi-social workers.” Social service coordinators would free up attorney time and help clients get the services they need—services that may even solve the landlord-tenant dispute. Additionally, staff reported that many tenants needed their services but either never accessed them or were above the income limit of 200% FPL and therefore unqualified.
Conclusion
The Shriver program demonstrates that some of the greatest benefits of counsel in eviction cases include settling more often and negotiating better terms that will save the tenant money and help them find new housing. It also illustrates the need for other supportive social services. While everyone deserves legal help when facing eviction, sometimes social services can better solve the underlying problem.
It is important to remember that a pilot program serving only a small subset of tenants facing eviction is fundamentally not right to counsel. Right to counsel in eviction cases would look like every tenant having legal representation. It would look like equity.
Amanda Baird anticipates graduating from Boston University School of Law in May 2022.
