How a Massachusetts Town Seized a Farmer’s $370k Property to Cover a $60k Tax Debt – and Kept the Difference

Alan DiPietro (population 5,376) is an alpaca farmer. He lives in an RV, on the 34-acre farm where he keeps his alpacas. To make a living, he sells their fleece.

DiPietro wasn’t always a farmer. He was previously the chief engineer at iRobot which makes self-cleaning devices like the Roomba vacuum cleaner. He was disenchanted by the bureaucracy of the corporate world and decided to start his alpaca farming venture in 2008.

DiPietro has had a difficult time in the years that followed. In 2014 he suffered a financially-devastating divorce that ultimately led to bankruptcy. He had money left over in his 401(k) and used it to purchase the 34-acre farm he now owns and farms. However, the house he was currently living in was foreclosed and he was expelled in 2016. Then he moved to the farm’s motorhome.

DiPietro, in his later years, found himself in a. protracted legal dispute He was not allowed to use his property. He had previously mowed some fields, and built small wooden fencing and sheds. However, he was later informed that these actions were against certain environmental regulations.

DiPietro was unable to make a profit from his property due to various lawsuits and enforcement actions. His financial situation became very dire. In 2016, DiPietro became insolvent on his property taxes. He began paying 14 percent interest per year on unpaid taxes.

As the years went by, the legal battle intensified and DiPietro’s situation only worsened. In 2021, DiPietro owed $60,000 to the town in unpaid taxes and other expenses. DiPietro had the entire property for $370,000 at the time.

A few simple solutions are likely to be the best for his debt problems. Couldn’t he just make money with the property some other way or sell part of it to pay his debt? Indeed, he could—if the town would let him. He was stopped by the town at every turn. When he applied for a forestry permit to sell trees on his land, for example, the town’s conservation officials asked for it to be denied on account of his alleged environmental violations, and the department in charge of permits complied with this request.

The town also banned him from having a guard dog or connecting to the electrical grid. It would not legalize his address. Many potential projects were hampered by these and other restrictions. He also was denied permission to sell some of his land. This refusal was due to outstanding property tax debt.

DiPietro was in a Catch-22. To be allowed to make money, he had to repay the debt. However, he first needed to have money to pay off the debt.

Due to the outstanding debt, a court of land confiscated the property in December 2021 and transferred absolute title to town as payment. Since then, DiPietro has been evicted from the property by the town.

What about the $310,000 equity, which is above and beyond the debt? The equity that DiPietro rightfully owns? Oh, yeah. The town kept that…which it’s allowed to do under state law.

In recognition of the injustice, DiPietro was joined by the Pacific Legal Foundation. Forensic lawsuit On January 10, 2023 he was to go against the town, demanding that he be returned the equity that is rightfully his.

A pervasive problem

It is a practice to keep the equity of foreclosed properties above the debt owed. Theft of home equity, and it’s a lot more common than you might think. Across the country, local governments and private tax lien investors regularly foreclose on properties for unpaid tax debts and then keep the whole value of the property—even though that value is often far greater than the amount of debt that was owed.

38 States This is illegal. The foreclosing party must sell the property and return any profits to the original homeowner. In 12 states, however—one of which is Massachusetts—local governments or private investors can take the entire value of a tax-foreclosed home.

A PLF taken recently Report It is evident how widespread this practice has become.

“In our study of 31 Massachusetts localities, representing one-third of the state’s population, the government foreclosed and sold 254 homes for tax debt from January 2014 through June 2020,” PLF writes. “Massachusetts law allowed the taking of an estimated $60 million in equity above what these homeowners owed in property tax debt. Another 154 homes were foreclosed for tax debts from January 2014 through December 2020 by a private investment company that purchased tax liens (the right to collect a tax debt) from the state. Massachusetts law allowed the taking of an estimated $37 million in equity above what these homeowners owed in property tax debt.”

DiPietro lost approximately $310,000 equity, which is about 84 percent his property value. According to the PLF report, this is quite a common case. “In the localities we studied, homeowners lost 87% of their home equity, on average—nearly $260,000 per home,” PLF Notes.

Arguments in favor of this practice are that the forfeited equity amounts to a tax penalty or fine. The law was broken, and that has consequences. If the state decides that one of those consequences should include losing your equity in your home then so be it.

There are many arguments that this practice is not right. One is that detractors believe it is unjust to take more than what is owed. This is also against the law. “just compensation” The Fifth Amendment contains clause that states that if a government seizes private property for public purposes, it must compensate its owners accordingly.

The argument that this is a fine amounting to taking a drug test would be made by those who claim it. Detractors would counter that argument by pointing to Article Eighth, which says that fines exceedingly excessive shall not be imposed. This is an exorbitant fine, if there ever was one.

The last argument against this practice concerns the fact that it tends not to have a greater impact on the most vulnerable members in society than other. In its Massachusetts report, PLF reflects on this sad truth.

“Like similar tax foreclosure schemes in other states, the Massachusetts system likely hits vulnerable people the hardest,” PLF writes. “Most people don’t intentionally fail to pay their property taxes. As with the Calkinses [another case] and many others, life happens. Homeowners get sick, experience personal financial crises, or miscalculate a late payment. Research demonstrates that the elderly, sick, and poor are especially at risk of losing their most valuable asset—their home—for unpaid property taxes.”

Theft Should Be Illegal—Regardless of Who’s Doing the Stealing

The nineteenth century French economist Frédéric Bastiat coined a term that aptly describes this practice: legal plunder. Bastiat claims that the law should prohibit theft but is too often used to justify it by governments or special interest groups. Allow theft. Plunder is not outlawed but legalized and legitimized.

How can we tell when there is legal plunder? In his 1850 book, Bastiat provides a useful diagnostic tool. The Law.

“But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”

A world with secure property rights would make it a crime to take the entire value of a property in exchange for a smaller amount of debt. Some, including this author, would argue that property taxes are a crime. as such These are considered legal plunder since they involve the forceful taking of money from peaceful property owners.

It doesn’t matter if you agree or disagree with this statement, but it is clear that taking equity beyond what is owed to someone is theft. This is not only a grave injustice but it also damages vulnerable people and gives governments an incentive to support these people in a corner as the Bolton government did for DiPietro.

It’s long past time to end this predatory practice.

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