Legislation to Reduce Property Tax Foreclosures Clears Budget Hurdle

July 22, 2024 — Press Release

Final Conference Committee budget includes measures to protect homeowners, providing affordable payment plans and reduced interest rates on past due balances

BOSTON — On Friday, Massachusetts lawmakers took a huge step forward for low-income and vulnerable homeowners, approving a measure that reduces Bay Stater’s risk of losing their homes to property tax foreclosure. Homeowners in Massachusetts, and across the nation, have lost their homes and the equity they’ve built in them due to unpaid property tax debts– and older adults on a low or fixed incomes and Black and Latino/Hispanic households are hardest hit.

“We are thrilled that House and Senate leaders approved policy protections for Massachusetts residents at the greatest risk of losing their homes and hard-earned equity to tax foreclosure,” said Andrea Bopp Stark, senior attorney at the National Consumer Law Center. “Massachusetts is leading the nation with legislation to improve access to affordable repayment options that keep families, and their equity, in their homes.” 

In 2023, the U.S. Supreme Court ruled in Tyler v. Hennepin County that it is unconstitutional for a local government to take a property in a tax foreclosure and keep the excess surplus after the tax debt and costs are paid. Massachusetts is among the first states to revise its out-of-date laws in response.

The measure, among other provisions, will halve the interest rate on unpaid property taxes, from 16% to 8%, and allow for all the interest to be waived in certain situations. It also substantially reduces the down payment needed for homeowners to enroll in a repayment plan, from 25% to 10%.

For homeowners unable to retain their home, the budget measures call for the return of any excess sale proceeds to the homeowner, after taxes and certain costs are paid. It also provides that unclaimed surplus funds are transferred to the state’s unclaimed property fund so that owners who may not have known about the sale, such as heirs of a deceased homeowner, can access the funds.

“This measure  provides real relief for consumers overwhelmed by past-due property taxes and who were previously priced-out of repayment options by high interest rates and unaffordable down payments,” said John Rao, senior attorney at the National Consumer Law Center.  

“Home equity theft by Massachusetts cities and towns has been devastating for low-income homeowners struggling to pay their tax bills.” said Todd Kaplan, senior attorney at Greater Boston Legal Services. “This measure brings swift relief to people with property tax debt that has accumulated through no fault of their own, often because of inheritance or illness or other factors beyond their control. We’re grateful to the legislature for putting these much needed protections in place.” 

The legislature sent the measure, which is part of the Commonwealth’s FY25 budget, to Gov. Maura Healey for signature on Friday.