Massachusetts Enacts Law to Stop ‘Home Equity Theft’

En español | AARP applauds Massachusetts lawmakers for passing and Gov. Maura Healy for enacting a law that makes a practice known as home equity theft illegal in the Bay State.

The AARP-backed measure prevents cities and towns from taking a person’s home to recoup back taxes and then selling the home and keeping any leftover money. Under the law, any surplus must be returned to the former homeowner after the debt and expenses incurred in the sale are covered.

AARP Massachusetts wrote to state legislative leaders urging them to make the change, which was included in the fiscal 2025 budget Healy signed into law July 25. Local governments should not be allowed to take someone’s entire property as payment for a small debt and keep the profits, AARP argued.

AARP State Director Jennifer Benson said the law “will give older Massachusetts residents peace of mind, knowing that the government can only take what it is owed.”

“We thank Massachusetts elected leaders for protecting homeowners in our state,” Benson said.

The law includes other safeguards for homeowners facing foreclosure, including a tiered approach to selling the property, affordable repayment plans and better notification. It also cuts the interest rate on past due amounts in half, from 16 to 8 percent.

Massachusetts is among eight states where AARP has helped pass laws banning the practice this year. The others are Colorado, Idaho, Maine, Minnesota, Oregon, South Dakota and Wisconsin.

The changes follow a U.S. Supreme Court ruling last year that struck down a Minnesota law that permitted so-called equity theft. AARP Foundation lawyers filed a brief in that case supporting Geraldine Tyler, a 94-year-old Minnesota woman who lost her condo after she failed to pay $15,000 in back taxes, fees and interest. Court documents showed that Tyler’s county sold the home for $40,000 and kept the $25,000 surplus.

AARP has argued such laws can be catastrophic for older homeowners on fixed incomes, many of whom struggle to pay for food, medication and utilities and cannot afford professional financial advice.

“While property owners should be aware of their responsibility to pay their real estate taxes on time, many of them, particularly the more vulnerable elderly population, don’t understand the complicated tax lien and foreclosure process,” AARP Massachusetts wrote in a June letter to House Speaker Ronald Mariano.

Read more about AARP’s 2025 budget wins on behalf of older Bay Staters, and visit AARP Foundation Property Tax-Aide’s website to see if you can lower your property tax bill.

Natalie Missakian covers federal and state policy and writes AARP’s Fighting for You Every Day blog. She previously worked as a reporter for the New Haven Register and daily newspapers in Ohio. She has also written for the AARP Bulletin, the Hartford Business Journal and other publications.

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