Quincy residents all know that not making one's mortgage payments can lead to foreclosure. What they may not know is that Quincy is one of several cities in Massachusetts that practices the dubious, albeit legal, sale of tax liens to private companies. These companies are then free to move aggressively to foreclose upon owners of residential real estate who had no idea they were at risk.
The way a tax lien sale works is as follows. Say a property owner falls behind on tax payments, utility bills or other payments to local agencies. The city can place a tax lien on the title to the property. Rather than go through the process of trying to collect the money owed, the city can sell the tax lien to a third party. Companies funded by private investors may even pay more than the actual amount owed in order to take over the tax lien.
Why would they do this? The answer is, because they can then try to foreclose upon the property and make back significantly more than they paid for the tax lien. Purchasing a tax lien of a few thousand dollars or even just a few hundred dollars, for example, could mean ultimately acquiring a home or apartment building worth several hundred thousand dollars.
Right here in Quincy, one company purchased nearly 90 tax liens four years ago. Since 2015, the company has filed nearly 20 evictions against tenants in properties it acquired in this way. Owners of residential real estate in Quincy are becoming increasingly aware of the tactic, however, and some legislators are advocating for reforms to the 1996 law that made tax lien sales possible.
When residential real estate owners find themselves faced with a foreclosure based on a tax lien sale, consultation with a legal professional is encouraged. Courts have been willing in some cases to reverse these foreclosure judgments if a convincing argument can be made on behalf of the property owner.
Source: WGBH News, "Tax Lien Law Haunts Massachusetts Property Owners," Jan. 21, 2018