Massachusetts Has a Problem: The Unconstitutionality of the Tax Deed

Abstract

The predominant method for collecting delinquent real estate taxes in Massachusetts is the use of the “tax deed” as authorized by Chapter 60, Sections 53-54. Under the authorized procedures, each municipality’s tax collector can execute and record a deed that transfers fee simple title to the real estate to the municipality subject to the taxpayer’s statutorily created redemption right. If the redemption right is or cannot be exercised, all of the taxpayer’s rights in the property, as well as other’s rights created by encumbrances such as mortgages, are terminated by the foreclosure process provided for in the statute. Importantly, the municipality does not obtain title to the taxpayer’s land by foreclosure; instead, it merely frees itself of any remaining claim by the taxpayer.

The problem with the tax deed procedure is that it fails to provide both procedural and substantive due process to the taxpayer. Procedurally, although adequate notice is given, title to the taxpayer’s real estate is taken by the government without a hearing. Based on an unreviewed decision by a municipal tax collector, the taxpayer immediately loses title to the land. Substantively, by using a tax deed, the municipality engages in the taking of property without providing reasonable compensation. The value of the land taken for payment of the tax debt is not evaluated in the context of the debt owed. Empirical evidence shows that the property’s value significantly exceeds the debt owed, giving the municipality the ability to collect almost fifty dollars for every dollar of delinquent real estate tax owed, on average. Each year, approximately $56,000,000 is unconstitutionally appropriated from taxpayers. This article explores these problems.

Keywords: Due Process, Real Estate Tax, Tax Foreclosure

JEL Classification: K11, K19, K34