When Charles and Selma Abdelahad foreclosed on a property in Grafton in 1992, they were unaware that it had been taken by the Town of Grafton for unpaid taxes in 1991, notwithstanding the proper notice the Town had provided or the recording of the taking in the registry of deeds. They paid the current taxes on the property, but received no other notice of and never satisfied the lien for the unpaid taxes that were the subject of the 1991 taking. In 2003, the Town recorded another taking, for unpaid taxes for the fiscal years covered by the 1991 taking and the fiscal years leading up to the Abdelahads acquisition of the property. Later in 2003, the Town recorded a Disclaimer and Release, releasing the 1991 taking. The effect of the Disclaimer and Release was to release the liens for unpaid taxes secured by both the 1991 and 2003 takings. In 2010, the Town realized its error and tried to correct it by recording amendments to the Disclaimer and Release that purported to release the 2003 taking rather than the 1991 taking. The Abdelahads claim that the Town could not correct its error after seven years. After a summary judgment order and a subsequent trial, I find that (a) the Towns error was substantial and misleading and thus could not be corrected, (b) the result is that the liens for unpaid taxes on the property have been released, except that (c) pursuant to G.L. c. 60, § 37, the liens will continue for 90 days after the date of judgment, giving the Town the opportunity to record a new taking, and (d) in the interests of justice and equity, for any new taking, the subject taxes shall be deemed to have been unpaid in fiscal year 2015 for the purposes of calculating interest under G.L. c. 59, § 57.
Charles M. and Selma Abdelahad filed their Verified Complaint to Quiet Title (complaint) on December 17, 2012. The Town of Grafton (Town) filed the Answer of Defendant Town of Grafton on January 31, 2013. The case management conference was held on February 14, 2013. On March 29, 2013, the parties filed their Joint Statement of Agreed-Upon Facts and the Abdelahads filed the Plaintiffs Motion for Summary Judgment and their Memorandum of Law in Support of Plaintiffs Motion for Summary Judgment. The Town filed Defendant Town of Graftons Motion for Summary Judgment and Defendant Town of Graftons Memorandum of Law in Support of its Motion for Summary Judgment on April 1, 2013. The Abdelahads filed their Reply Memorandum in Support of Plaintiffs Motion for Summary Judgment and Opposition to Defendants Motion for Summary Judgment on April 29, 2013. On May 14, 2013, the court heard the parties cross-motions for summary judgment and took the cross-motions under advisement.
On March 28, 2014, the court entered its Order on Cross-Motions for Summary Judgment (summary judgment order), in which it entered judgment on some issues and reserved others for trial. A pre-trial conference was held on September 10, 2014. The trial was held on December 16, 2014. The court heard testimony from Charles M. Abdelahad. Exhibits 1-15 were marked. The Defendant Town of Graftons Post-Trial Brief was filed on January 29, 2015. The Plaintiffs Proposed Findings of Fact and Conclusions of Law was filed on February 2, 2015. The court heard closing arguments on February 19, 2015 and took the matter under advisement. This decision follows.
Findings of Fact
Based on the undisputed facts, the exhibits, the testimony at trial, and my assessment of credibility, I make the following findings of fact.
1. On May 10, 1988, Kenneth B. Welch and James M. Bianchi, Trustees of B.W. Realty Trust, gave a mortgage to the Abdelahads on a property located at 45 Creeper Hill Road, Grafton, Massachusetts (property), which was recorded in the Worcester County Registry of Deeds (registry) at Book 11328, Page 387 (mortgage). Exhs. 1, 3.
2. The property is vacant land. The Abdelahads took the mortgage in settlement of a dispute with the mortgagors, who the Abdelahads had engaged to build a house on another parcel. Tr. 7-9.
3. On June 28, 1991, the Town recorded in the registry at Book 13491, Page 112, an Instrument of Taking of the property, dated June 27, 1991 (the 1991 taking). The 1991 taking was made for unpaid taxes for fiscal years 1988 through 1990. Exhs. 1, 2.
4. The Abdelahads foreclosed on the mortgage, and acquired the property by a foreclosure deed dated December 2, 1992, and recorded in the registry at Book 14776, Page 13. Exhs. 1, 4. The Abdelahads did not pay outstanding taxes at the time they recorded their foreclosure deed and were not aware that the property was subject to the 1991 taking. Exh. 1. At no time during the Abdelahads foreclosure, sale, or purchase of the property did the Abdelahads obtain or record a municipal lien certificate. Exh. 1; Tr. 10.
5. Shortly after December 2, 1992, Mr. Abdelahad called the Towns tax office and asked if any taxes were owed on the property by. He was told that if he owed any taxes he would be sent a bill, and that as long as he paid his tax bills, he would not owe any taxes. Tr. 16- 17, 21-22.
6. On May 7, 2003, the Town recorded in the registry, at Book 29956, Page 167, a second Instrument of Taking of the property, dated April 25, 2003 (the 2003 taking). The 2003 taking was made for unpaid taxes for fiscal years 1988 through 1993. Exhs. 1, 5.
7. On August 12, 2003, the Town recorded in the registry, at Book 31190, Page 180, an instrument entitled Disclaimer and Release pursuant to G.L. c. 60, §§ 37, 84 (the 2003 disclaimer). The 2003 disclaimer states that it disclaims and releases the 1991 taking. Exhs. 1, 6.
8. On December 20, 2010, the Town recorded in the registry two Amendments, at Book 46832, Pages 31 and 35, respectively (the 2010 amendments). Exhs. 1, 7, 9. That same day, the Town recorded in the registry two Affidavits pursuant to G.L. c. 183, §5B, at Book 46832, Pages 33 and 36, respectively (the 2010 affidavits). Exhs. 1, 8, 10. The Towns 2010 affidavits and amendments alter the 2003 disclaimer so that it references and disclaims the 2003 taking instead of the 1991 taking. Exhs. 1, 7, 8.
9. At no time have the taxes assessed on the property that are the subject of the 1991 taking or the 2003 taking been paid either by the assessed owner or the mortgagee. Exh. 1.
10. At no time before October 27, 2010, were the Abdelahads aware that there were unpaid taxes owed on the property. They only became aware of the unpaid taxes and the two takings after receiving a letter from counsel for the Town. Exh. 11; Tr. 11-13, 18.
11. The Abdelahads paid all tax bills that they received between the 1992 foreclosure and 2010. Tr. 17. The Abdelahads never received a bill for back taxes. Id. Had the Abdelahads received a timely bill they would have paid it or would have contacted the Town to discuss options, such as a payment plan. Tr. 17-18.
12. The unpaid taxes assessed on the property have been accruing interest annually since they became delinquent. Exhs. 5, 13, 15. Tr. 24.
In their Complaint, the Abdelahads allege that the 1991 and 2003 takings are invalid because the Town is time-barred from foreclosing any Tax Title Takings on the property for fiscal years 1988-1993. They seek a judgment (a) ordering that the Towns 2010 amendments to the disclaimer are ineffective and all takings and liens have been removed from the property and (b) ordering that the Town may not file a new taking for the taxes due on the property for fiscal years 1988-1993.
I incorporate into this decision all conclusions of law that I made in the summary judgment order. Specifically, for the reasons set forth in the summary judgment order, I find the following: (1) The 1991 taking was valid when it was made. (2) The 2003 taking was valid when it was made, and is not time-barred by the three-year, six-month limitations period of G.L. c. 60, § 37. (3) Pursuant to § 37, the 2003 disclaimer released the liens for unpaid taxes created by the 1991 taking, released the liens secured by the 2003 taking, and had the effect of extinguishing the Towns rights under both the 1991 and 2003 takings. (4) The 2010 affidavits were valid. (5) The 2010 amendments and the 2010 affidavits could only act to correct the 2003 disclaimer if the Town could show that the errors of the 2003 disclaimer were neither substantial nor misleading. Id. The questions reserved to trial were (a) whether the errors of the 2003 disclaimer did not so prejudice the Abdelahads that these errors were substantial and misleading, and (b) whether, in the event of a judgment against it, the Town would have the benefit of the statutory 90-day extension of the tax lien during which it could record a new taking. See id.
The 2010 Amendments. General Laws c. 60, § 37 (hereafter § 37) provides, [n]o tax title shall be held to be invalid by reason of any error or irregularity which is neither substantial nor misleading. Id. It has always been held that a non-compliance by the assessors with the strict requirements of the statutes, if it does not affect the rights of the tax-paying citizen, does not render the tax invalid. Trustees of the Hawes Fund in Boston v. City of Boston, 346 Mass. 26 , 27 (1963), citing Bemis v. Caldwell, 143 Mass. 299 , 300-301 (1887). Therefore, if the error of the 2003 disclaimer would affect the rights of the Abdelahads, it was substantial and misleading, and cannot be corrected by the 2010 amendments.
Once an error has been shown, the party who asserts the insubstantiality has the burden of proving that fact. Bartevian v. Cullen, 369 Mass. 819 , 822 (1976); see also Pass v. Town of Seekonk, 4 Mass. App. Ct. 447 , 450 (1976) (holding the town had the burden of proving that the failure of the collector to recite the name of the person on whom he had made his demand was insubstantial). At trial, the Town had the burden of showing that the error made in disclaiming the wrong taking was insubstantial.
The Town argues that as the Abdelahads had no knowledge of any unpaid taxes or the erroneous disclaimer until 2010, they cannot be prejudiced because they could not have relied on the error if they were unaware of it. The Town also argues that there were no errors which amount to legal prejudice. The Abdelahads argue that this fails to meet the burden showing that the error is insubstantial, and that the combination of their being misled by the Town as to whether any taxes were outstanding, the failure of the Town to give them any notice, their lack of actual knowledge of the takings, and the large amount of interest that has accrued constitutes prejudice. The Town is correct that it met all of the statutory requirements for notice and was not legally obligated to send out further notices after the taking was filed. G.L. c. 60, §§ 3, 53-54. The publication notice of tax taking in the Grafton newspaper met the requirements of G.L. c. 60, § 40. It is also correct that the Town may not be bound by the informal statement of someone in the tax office, who told Mr. Abdelahad that he would be sent a bill if any taxes were owed. Stadium Manor, Inc. v. Division of Administrative Law Appeals, 23 Mass. App. Ct. 958 , 962 (1987) (stating, [t]hose who deal with the Government are expected to know the law and may not rely on the conduct of Government agents contrary to law). Mr. Abdelahad should have made a written request for a municipal lien certificate, pursuant to General Law c. 60, § 23, to be certain that no taxes were owed on the Property.
On the other hand, the interest accrued on the unpaid taxes between 2003 and 2010, during which both the 1991 and 2003 takings were waived and the Abdelahads had no obligation or opportunity to address the principle or interest on the taxes, amounts to 112% of the unpaid taxes due in 2003. G.L. c. 60, § 37. Because this rate is provided for in the statute, this huge accrual of interest on a valid lien could not be challenged. Accrued on an invalid lien, however, this large amount of interest makes the error substantial, and the Town has not provided testimony to suggest otherwise. Therefore, the amendments to the 2003 disclaimer are ineffective at reviving the 1991 taking because allowing the correction of the substantial error would affect the rights of the Abdelahads.
Towns Right to Record a New Taking. The substantial error means that the 2003 disclaimer cannot be amended. Therefore, the 1991 taking and the 2003 taking on the property are invalid. Section 37 provides that if while [the] lien is in force . . . the sale or taking is invalid . . . , the lien . . . shall continue for ninety days after . . . after a release, notice or disclaimer . . . or for ninety days after the . . . taking has been finally adjudged invalid by a court of competent jurisdiction. Id. The Abdelahads argue that because the disclaimer was effective, the last valid tax lien on the property expired on November 10, 2003, ninety days after the disclaimer was recorded. The Town argues that the lien will continue for 90 days after judgment in this action. The Town is correct. As a result of this decision, this court of competent jurisdiction will finally adjudge both the 1991 and 2003 takings invalid. By the terms of § 37, this means that the takings will continue for ninety days from the judgment in this action, and the Town will be able to record a new taking on the property if it does so within ninety days. Id.
Any taking recorded subsequent to this judgment which includes unpaid taxes from fiscal years 1988-1993 would also include all interest accrued since the debts became delinquent. G.L. c. 59, § 57; G.L. c. 60, § 37. That interest accrues at the rate of 14% per year. G.L. c. 59, § 57. If the Town does record a new taking, the amount of interest which will have accrued over more than twenty years is substantial. Having found that the substantial interest accrued as a result of the Towns error unjustly affected the rights of the Abdelahads, making the error substantial and misleading, it is unjust and inequitable to subject the Abdelahads to nearly the same interest upon the recording of a new taking. General Laws c. 59, § 57 provides that interest on unpaid taxes runs from certain dates in the fiscal year in which the tax is payable. Should the Town record a new taking for unpaid taxes within 90 days of the date of judgment in this action, the fiscal year in which those unpaid taxes were payable is hereby deemed to be fiscal year 2015, and interest on those unpaid taxes shall be calculated accordingly pursuant to G.L. c. 59, § 57.
As set forth above, I conclude as a matter of law that (a) the 2003 disclaimer released the liens for unpaid taxes created by the 1991 taking, released the liens secured by the 2003 taking, and had the effect of extinguishing the Towns rights under both the 1991 and 2003 takings; (b) the errors of the 2003 disclaimer were substantial and misleading, so that the 2010 amendments were ineffective to correct those errors; (c) the liens for unpaid taxes created by the 1991 taking shall continue for 90 days after the date of judgment in this action; and (d) should the Town exercise its rights under § 37 and record a new taking for unpaid taxes within 90 days after the date of judgment, the fiscal year in which the unpaid taxes were payable pursuant to G.L. c. 59, § 57 is hereby deemed to be fiscal year 2015, and interest on those unpaid taxes shall be calculated accordingly pursuant to G.L. c. 59, § 57.