Back in our May newsletter, we cautioned that the legislature was likely to amend the statutes on foreclosure of tax title properties. The legislature has now acted; outside sections (Sections 80-99) of the Fiscal 2025 Budget enact legislation to prevent municipalities from keeping excess equity in homes taken and foreclosed in tax title proceedings. In a move that was largely spurred by recent Supreme Court cases, the new provisions, which take effect November 1, 2024, require municipalities to follow strict notice and accounting procedures to ensure that delinquent taxpayers have the opportunity to receive any equity in their home over the amount of the taxes and fees owed to the municipality. For example, instead of merely requiring notice of the town’s intention to take the land, such notice must now use forms prepared by the Department of Revenue, which are required to be understandable by “a least sophisticated consumer” and published in seven languages, that detail the taxpayer’s rights and the effect of failing to respond to a complaint to foreclose the tax title.
Following a judgment of the land court foreclosing the right of redemption, the municipality must determine whether it will retain or sell the property. If retaining the property, the town must have it appraised; after sale or appraisal, the town must mail an itemized accounting of the costs and fees associated with the appraisal or sale, and the amount of excess equity. Such excess equity shall be held in escrow for 19 months unless it is claimed earlier.
The law also contains provisions for vacating a decree of foreclosure in the land court and extends the time for delinquent property owners to exercise certain rights under the law. For example, a town could previously bring a petition to foreclose all rights of redemption six months after a taking; now, the town must wait twelve months.
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