NEW BEDFORD — An $85,000 settlement has been reached in the case of a 67-year-old disabled New Bedford retiree who lost her home and more than $200,000 in equity on a property tax debt of less than $10,000.
The lawsuit was originally filed in Bristol County Superior Court in March and transferred to the US District Court in May due to federal constitutional arguments.
Deborah Foss was represented by the libertarian Pacific Legal Foundation, a national nonprofit organization “that defends Americans’ freedoms when threatened by government excesses and abuses,” according to its website.
The lawsuit named Tallage Davis LLC and the City of New Bedford as defendants and sought damages, restitution, and attorneys’ fees. Tallage Davis is a real estate investment firm headquartered in Boston.
According to the Pacific Legal Foundation, Tallage originally offered a $65,000 settlement that would have barred Foss from commenting on the case, either publicly or privately.
But she rejected the deal. According to the PLF, Tallage had argued that she agreed to the provision and agreed to the $65,000 settlement, but the court would not enforce that settlement agreement.
The $85,000 settlement does not include a comment ban, according to the PLF.
Tallage disputes this account. According to Tallage’s attorney, Daniel Hill, PLF’s attorneys agreed to “hatch” details of a confidentiality clause on June 10, but a week later told Tallage’s attorneys that Foss had decided that $65,000 wasn’t enough money.
The City of New Bedford is not responsible for any payment to the Applicant.
According to a press release issued by the city on Thursday, September 1, “the court issued its dismissal on August 12 ‘with prejudice’, meaning the decision is final and the plaintiff cannot refile the case. against the city in the future.”
According to the lawsuit, Foss purchased the property at 17-19 Valentine St. in 2015.
Foss lived on a fixed income of less than $1,000 a month and previously worked in the shipping and receiving department of a coffee company, according to the lawsuit. She suffers from chronic lymphocytic leukemia, COPD and neuropathy, according to the PLF.
She spent her savings and an inheritance from her mother in 2015 to buy the property for $168,500, where she lived with her wife and twin sister, according to the lawsuit.
Foss was unable to pay its property taxes in 2016 due to medical and financial issues, and the city initiated a tax hold of $3,748 in December 2016.
On June 4, 2018, the city awarded a tax title, a type of lien, to Tallage for an amount that had risen to $9,626.19, including $1,361.76 of accrued interest, according to the lawsuit.
By effectively selling the lien, the city gave Tallage Davis the power under state tax law to collect 16% interest on the debt and seize the property, according to the lawsuit.
It also gave Tallage the power to forfeit all equity in the property if Foss failed to pay the tax debt before the right of redemption was foreclosed.
Nine days after purchasing the lien, Tallage filed a lawsuit in land court against Foss to foreclose, according to the lawsuit.
Nine months later, the land court sent notice of the foreclosure proceeding by certified mail to the address, which Foss did not receive, according to the lawsuit. Certified mail was returned as unclaimed.
She received notification from a deputy sheriff two months later, in May 2019. Within a month, Foss responded to land court on her own, “asking the court to give her the opportunity to save her property and her savings. home,” according to the lawsuit.
She asked the court to set out a payment plan and give her six to 12 months to sell her house, pay off her debt and save her net worth. She told the court she couldn’t pay the debt without selling her property.
Tallage asked to strike the response because she was not a licensed attorney to practice law, according to the lawsuit. The land court granted the petition in July 2019 and advised Foss that she should hire a lawyer.
She didn’t have the money to hire a lawyer and was unable to get one through legal aid, according to the lawsuit. Foss also didn’t know her rights or whether she could sell the property without court permission. Foss was told in the foreclosure notice that she had to pay Tallage Davis $24,394.81 to keep her in the house. That total included taxes and interest collected after Tallage purchased the lien, according to the lawsuit.
The lawsuit argues that Foss should have been required to pay only the $9,626.19 it owed the city, interest on that amount, and attorney’s fees.
The land court issued a default judgment in September 2019, granting absolute title to Tallage Davis. The property, which was valued at $241,600 in 2022, was taken by Tallage Davis for an amount that had risen to around $30,000, including interest and attorney’s fees.
According to the lawsuit, Tallage did not notify Foss of the foreclosure until more than a year after the judgment, “depriving her of a reasonable opportunity to seek equitable relief in land court…”
Tallage began eviction proceedings in March 2021, and she was forced to leave in February, “rendering her homeless in the middle of a Massachusetts winter,” PLF attorney Joshua Polk said during a press conference on March 29.
Tallage then sold the property for $242,000, pocketing $232,373.81 more than he paid for the lien.
Foss was forced to live in her car after the eviction, according to the lawsuit.
Hill said the Pacific Legal Foundation, “a California-based political organization,”‘s characterization of the “facts leading up to the settlement is grossly misleading and, in some cases, just plain wrong.”
He said in a statement: “Ms Foss was not ‘thrown out of her home’. Instead, she agreed to vacate the property, which had already been seized over a year previously, in a stipulation filed with the Housing Court in return for monetary payment.”
He added, “Unpaid taxes from 2017 to 2021 exceeded $26,000. Ms. Foss never attempted to repay this debt, despite numerous collection attempts by the city and Tallage, and opportunities presented by the court. The amount of ‘equity’ that was left in the property after foreclosure is a far cry from what PLF would imply. PLF does not account for all subsequent taxes, interest and costs incurred by Tallage in the Land case. Short and subsequent environmental cleanup (for which Ms. Foss would have been legally obligated).”
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According to Hill, before Foss moved in, a fire department inspection of the home revealed a serious oil spill in the basement, which Tallage paid $80,000 to fix.
Hill said: “Commonwealth municipalities rely on homeowners to pay their taxes to fund our schools and other municipal services like fire protection and police. In 2017, New Bedford registered a “tax hold” against the Valentine Street property. the tax lien was originally for unpaid taxes in 2016, but taxes for each subsequent year also remained unpaid. The owner of this property was Deborah Foss, who held the property in a real estate trust. From the date she purchased the property in 2015, Ms. Foss had not paid a single property tax bill.”
The settlement statement released by the city on Thursday states: “The dispute arises from tax lien sales, in which a city sells the right to collect tax liens to a third party. Under Massachusetts law, many cities use the tax lien sales as another way to collect delinquent taxes and manage public funds without having to employ in-house legal staff dedicated to pursuing tax liens in land court.
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“In 2015, delinquent property taxes owed to the city totaled more than $22.6 million, an amount equal to nearly 6% of the city’s budget. To help ease this burden, the city, in accordance with Chapter 60, Section 52 of the General Mass Laws, initiated a joint tax lien sale.The winning bidder was Tallage LLC, now known as Tallage Davis.
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“The city’s outstanding tax burden had been cut in half, to $11.3 million, following the last tax lien sale in May 2019.
“Over the past decade, the city has taken significant additional steps to address delinquent taxes, including amending its tax refund ordinance in 2012. The amended ordinance allowed delinquent ratepayers to enter into agreements repayment term of up to five years and receive 50% interest rebate, after paying 25% of the outstanding balance as an initial deposit and while continuing to make current year payments.
“The City’s Office of the Treasurer-Collector continues to make collection of overdue taxes a priority and encourages ratepayers to enter into repayment agreements. As always, the city’s preference is to serve delinquent ratepayers by offering repayment arrangements and managing delinquencies internally.
According to the Pacific Legal Foundation, communities in Massachusetts have the same authority under state law to collect tax debts, but approach collection differently.
Some communities do not sell tax liens and rarely foreclose, “preferring to wait for homes with tax debts to be sold in a market transaction.” These municipalities then collect the tax debt and interest due on the sale proceeds, and the original owner (or the owner’s heir) receives the balance of the home’s equity,” according to a PLF study.
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Although the foreclosure process followed in the Foss case is legal in Massachusetts, the PLF’s position is that it violates the constitutions of the United States and Massachusetts. This is because the government has no right to take someone’s home and equity beyond what is owed. Owners are entitled to fair compensation and protection from excessive fines.
According to the PLF study, Massachusetts is one of twelve states that allow this practice. The PLF says it will continue to defend people against what it considers an unconstitutional practice.
House Bill 3053 was introduced in the Massachusetts Legislature in 2021 and would require tax lien holders to auction foreclosed property to the highest bidder, then follow traditional mortgage foreclosures by first applying the proceeds to the tax debt and other liens, then paying off what’s left. to the original owners.