When a taxpayer becomes delinquent in paying real estate taxes or other local charges that constitute liens on real estate, the municipality has statutory authority to take title to the taxpayer's property and, subsequently, to undertake proceedings to foreclose the owner's right to redeem that property from tax title per M.G.L. Chapter 60.
When real estate tax is uncollected by the Tax Collector, an Instrument of Taking is recorded at the Registry of Deeds. That instrument effectively places a lien on the property on which the tax is unpaid and the amount of the tax is certified to the Treasurer by the Tax Collector and becomes a Tax Title account. Upon the completion of the tax taking process, the Tax Collector provides a formal list of the recorded takings to the Treasurer. Upon receiving this list it becomes the Treasurer’s responsibility to collect the delinquencies. If the tax is not paid within six months, a Petition to Foreclose is filed in Massachusetts Land Court.
The interest rate on a Tax Title account is 16% as established by M.G.L. Chapter 60, Section 62. This was designed to be punitive as the amount collected for taxes offsets the cost of City services (e.g., schools, police, fire, highway, library, etc.). When taxes are not paid, the City’s cash flow is adversely affected.
A taxpayer may redeem the property either by making full payment of all taxes, interest and fees or by entering into a payment agreement with the Treasurer as governed by City Ordinance.
To enter into the Treasurer’s payment agreement, the taxpayer must pay:
- The current year’s taxes and water/sewer bills in full,
- Any fees associated with the tax titled property (i.e. Land Court filing fees when applicable), and
- 25% of the delinquent taxes owed at the time the agreement is signed.
The remaining 75% of the amount owed is then amortized over three years at an interest rate of 16% to establish a monthly installment to be paid each month by the taxpayer. It is the taxpayer’s responsibility to make these payments when they are due as there is no billing associated with this agreement. Also, the taxpayer must keep all future taxes and water/sewer bills current or the agreement shall be voided and the Treasurer shall proceed with the foreclosure process without notice.