Property Tax

Massachusetts Homeowners Attempt to Reclaim Property After Title Taken for Unpaid Tax

Published on: April 30, 2019 | by Pulgini & Norton, LLP

Failing to pay Massachusetts property taxes may lead to significant consequences for property owners, including the taking of a tax title to their home. In many cases, however, the law provides a way for individuals to reclaim ownership. In an April 17, 2019 case before the Massachusetts Land Court, the homeowners sought to determine the amount needed to redeem property that had been taken for nonpayment of taxes. The plaintiff in the case was a private company that held the tax title from their house. The plaintiff argued that the redemption amount must include the sum of tax payments that it had made since acquiring title, as well as 16% interest on that amount.

The problem arose in 2011, when the City took title to the defendants’ house pursuant to Massachusetts law, as the defendants had not paid their real estate taxes on the property that year. The law allows the City to hold title until the defendants exercise their right of redemption, or until they no longer possess the right of redemption. During that time, the accrued interest rate on the defendants’ redemption amount (i.e., unpaid taxes, fees, costs, etc.) is 16%.

In 2016, the plaintiff purchased the tax title from the City at auction. The plaintiff paid the City the outstanding taxes on the defendants’ property and continued to pay the taxes on the property for the next three years. The plaintiff subsequently initiated foreclosure proceedings against the defendants, who answered the complaint by claiming the right to redeem title to the property. The plaintiff argued that the redemption amount should include the following: unpaid taxes for 2011 through 2015 plus interest and fees, the subsequent taxes paid by the plaintiff from 2016 to 2018, and interest at 16% on that amount. The defendants agreed to the unpaid taxes for 2011-2015, but argued that the plaintiff had no authority to claim the other amounts under the statute.

Massachusetts Appeals Court Finds for Landowners Challenging Property Valuation

Published on: March 21, 2016 | by Pulgini & Norton, LLP

In a recent decision, the Appeals Court of Massachusetts reviewed a decision from the Tax Board affirming the plaintiffs’ property valuation as determined by the local board of assessors. In Sliski v. Bd. of Assessors of Lincoln, 45 N.E.3d 612 (Mass. App. Ct. 2016), the plaintiffs owned two parcels of land, a larger parcel of over 4.5 acres used for agricultural purposes, and a small parcel of just less than one acre upon which the plaintiffs’ residence was located. The plaintiffs had previously received an agricultural exemption for the large parcel twenty-five years ago. However, in calculating the assessment, the local board of assessors applied a multiplier of 9.00 to the value of $7.20 per square foot for the small parcel. This resulted in an appraisal of the small parcel at a rate of over $2.8 million per acre. The plaintiffs challenged the assessment, arguing that it did not accurately reflect the value of the small parcel, nor the value of the land as a whole due to the agricultural exemption.

On appeal, the court found that the Board did not appear to have considered the methodology in reviewing the town’s valuation of the small parcel. The court was particularly concerned by the use of the 9.00 multiplier. The court noted that the town’s residential land valuation document stated that a factor of 1.00 should be applied to property within the neighborhood in which the small parcel is located. Further, the document did not include a factor of 9.00 for any property, as the highest factor listed was 1.91. The court therefore could not affirm a decision by the Board that did not appear to consider the Massachusetts statute requiring that all land occupied by a dwelling be valued, assessed, and taxed by the same standards as other taxable property.

Massachusetts Court of Appeals Finds in Favor of Taxpayer in Tax Abatement Case

Published on: October 5, 2015 | by Pulgini & Norton, LLP

The Massachusetts Court of Appeals reviewed a decision by the Appellate Tax Board in Russell Block Associates v. Board of Assessors of Worcester, ultimately affirming its determination granting the taxpayer a tax abatement on a parking garage. The primary issue in the case was whether the garage was a multiple-use property appropriately classified as part residential and part commercial.

In 1992, the taxpayer constructed a residential building and the five-story, 300-parking space garage at issue in the case, which is located across a side street from the residential building. Between 100 and 250 parking spaces in the garage are reserved for exclusive use by tenants of the residential building. The Worcester board of assessors had classified the garage as a mixed-use property, taxing 85 percent of its value at the lower residential rate since it was built. In 2012, however, the assessors changed its classification to be entirely commercial. The taxpayer appealed, and the Appellate Tax Board granted an abatement.

Classification for purposes of determining tax rates depends on the use of the real property as residential, open space, commercial, or industrial. The law also defines a mixed-use category of real property, which allocates the percentage of valuation on each portion of the property devoted to that particular use. The assessors argued that the parking garage at issue is not used for habitation and does not satisfy the requirements of the statute. However, the Court of Appeals disagreed, recognizing that the statute’s definition of residential includes accessory land, buildings, or improvements incidental to such habitation. The court went on to explain that the parking garage was part of the development plan of the residential building, and the residents of the building needed parking just as any other resident would. The garage was built to serve these needs, meeting the zoning and lending requirements for the development of the residential building. Therefore, the parking garage was incidental to habitation within the meaning of the law.

Massachusetts Land Court Finds For Owners in Property Tax Lien Foreclosure Proceeding

Published on: July 31, 2015 | by Pulgini & Norton, LLP

In a newly released opinion, the Massachusetts Land Court discussed the harsh consequences of property tax lien foreclosure proceedings. In Tallage LLC v. Meaney, the homeowners’ unpaid water and sewer bills became a tax debt, since those utilities are provided by the city. The city auctions its tax receivables to private companies, which then pursue the taxpayers for the lien amounts and may obtain a right of redemption on a property tax lien. In Tallage, the company that purchased the property owners’ tax liens initiated tax lien foreclosure proceedings against the owners.

Procedurally, in tax foreclosure cases, the lienholder files an action in the Land Court to foreclose the right of redemption. If no voluntary agreement is made as to payment of a redemption amount, the court will determine the amount and date by which it must be paid. If the taxpayer fails to comply with the court’s order, the right of redemption is foreclosed and a judgment is entered. However, the judgment may be vacated if the party moves the court to do so within one year, and the court finds that, after careful consideration, this is required to accomplish justice.

It is important to note that there are key differences separating tax foreclosure cases from mortgage and other kinds of foreclosures. First, since the interest rate accrues at 14% from the time the taxes are due until the sale occurs, and 16% thereafter, small tax bills can rapidly become significant. In addition, unlike mortgage foreclosures or judgment liens where the remaining sale proceeds (minus the obligation amount) are returned to the property owner, when the right of redemption on a property tax lien is foreclosed, the lienholder acquires “absolute title” to the property, eliminating all of the property owner’s interest and equity. Remarkably, the lienholder receives the entire amount of the proceeds once the foreclosure is final, regardless of the amount owned on the lien. In Tallage, the owners’ property had a fair market value in excess of $270,000. The plaintiff acquired the tax title to the property for only $1,052—a windfall that did not go unnoticed by the court.

Massachusetts Appeals Court Upholds ATB Decision in Tax Abatement Case

Published on: March 19, 2015 | by Pulgini & Norton, LLP

In the recent real estate case, Roman Catholic Bishop of Fall River v. Board of Assessors of Attleboro, App. Ct. Mass. (2014), the Appeals Court of Massachusetts had before it the issue of a requested tax abatement for a church property.

The plaintiff timely paid the assessed tax and filed a request for an abatement, claiming that the portion of the property that was assessed a tax was also entitled to exemption, because it was dedicated to cemetery use. (It is worth pointing out here that in order to file for an abatement, you must first pay the taxes owing, or else you will not be able to file. If the abatement is granted, you will be refunded the relevant amount that is adjusted.)

The plaintiff appealed the Appellate Tax Board’s determination of taxes owed on its property. The plaintiff is the owner of a two-acre parcel, which contains a cemetery, composed of graves and unimproved land dedicated to cemetery use. The remainder of the land had a church building, which closed some two years prior to the tax assessment, and two other unused structures.

New Year and New Property Taxes in Massachusetts 2015

Published on: February 9, 2015 | by Pulgini & Norton, LLP

Now that we are firmly into the new year, Massachusetts residents should have already received their updated property tax assessments in the mail. Property taxes are calculated by multiplying your city’s tax rate by the assessed value of your property and all the structures on it, which may vary depending on the way in which the assessor arrives at your property’s estimated value.

Overall, your bill may not necessarily have increased that much since your assessment last year. That is because in Massachusetts a state regulation, called Proposition 2½, caps the amount of taxes that cities and towns may levy to an increase of no more than 2.5 percent (hence the name) each year.

Factors that can affect the property tax assessment include a renovation to your home, an addition to your home, or any other major improvement.

Your Massachusetts Real Estate Attorney Can Assess the Possibility of Lowering Your Property Tax

Published on: December 17, 2014 | by Pulgini & Norton, LLP

Boston Property Values Skyrocket

Owners of commercial and residential properties all over the Boston area are facing higher property tax assessments. This goes along with the good news – bad news phenomenon of the relentlessly rising value of Boston real estate. In fact, the collective value of Boston residential and commercial properties has now soared to $100 billion, says the City Assessor’s Office. Next year, property owners will find tax bills in the mail, reflecting their higher assessments and the associated higher property taxes to be calculated in the beginning of 2015.

During the last decade, Boston’s real estate has been transformed by massive public and private developments that have changed the character of many areas of the city. The Seaport District, formerly a barren waste of parking lots, is now the site of new commercial office space. Downtown has become more accessible via the renovation of transportation corridors, such as The Big Dig and Rose Kennedy Greenway. New office and residential towers have risen from North Station to the Fenway. In the residential market as well, prices have shown a dramatic shift upwards. Condominiums in the heart of Boston sold for $830,000 in the fall of 2014, a price 16% higher than in 2013. In neighborhoods such as the Back Bay, prices are even higher. The average condo there is now valued at more than $1.4 million.

Higher Assessed Values Mean Higher Property Taxes

Higher assessments lead to higher property taxes, a potential deal-breaker for a business owner’s bottom line. An advocate for businesses in the Back Bay said tax hikes are one of many factors making it more difficult for smaller shop owners to continue operating there. Some properties, such as a pub on Boylston Street, have gone up in assessed value by as much as 81 percent, from $1.9 million to $3.5 million. This would add tens of thousands of dollars to the property owner’s annual tax bill. Small business owners predict hardships, since income may not rise proportionately to cover the increased tax expense. Owners of local businesses are concerned that higher costs will drive out all but large national and international chain stores, altering the character of neighborhoods and resulting in vistas of block upon block of banks and cell phone stores.