In Massachusetts, cities and towns have a duty to collect property taxes and are empowered to do so under M.G.L. c. 59 & 60. When property taxes become delinquent for specific period of time, most municipalities place a lien on the property for the tax amount by recording an Instrument of Taking with the Registry of Deeds in the county where the property is located. This preserves a municipality’s right to collect its unpaid property taxes

A legal complaint may be filed in the Massachusetts Land Court to foreclose on that lien. The Land Court process affords judicial review of all aspects of the lien foreclosure process. For over 50 years, Massachusetts Courts interpreted a final judgment in n foreclosure as absolute, and that whether the property was ultimately sold at auction or retained for municipal use, there was no affirmative obligation to return any excess equity in the property to former owners. See Kelly v. Boston, 348, 388 Mass. 385 (1965).

This changed drastically in May of 2023, when the Supreme Court decided Tyler v. Hennepin County, 598 U.S. 631 (2023). The Court determined a similar Minnesota property tax foreclosure law as unconstitutional and ruled that excess equity should be returned to the property owner. As a result, the Massachusetts legislature responded by amending M.G.L. c. 60.

Today, once a final judgment has been entered by the Land Court, a municipality must affirmatively elect to either retain the foreclosed property for municipal use or list the property for sale. M.G.L. c. 60, §64A. In either situation, the excess equity must be accounted for and returned to the property’s former owner.

In light of the Tyler decision and the resulting legislative changes in Massachusetts, cities and towns must now navigate a more structured process for handling excess equity in tax title foreclosures. For more information regarding the tax title process questions, please contact D’Ambrosio, LLP.