GREENFIELD — City Council voted unanimously to settle a $354,000 home equity lawsuit Wednesday evening, putting an official end to the practice of taking the entire equity of a home in the event of a tax lien foreclosure, after the state declared it illegal last summer.

Although the settlement, which will be paid for using free cash, passed unanimously, some city councilors expressed reluctance to support settling, arguing that the practice was legal at the time the plaintiffs’ excess home equity was taken.

“The property was taken before the federal judgment; therefore, it was completely, 100% legal to do at the time,” At-Large Councilor Michael Terounzo said. “The fact that a lawsuit’s able to be filed for something that happened before the law was changed is kind of bunk to me.”

Plaintiffs Stephen Woodbridge and Roberta Browning filed suit against Greenfield in September 2023 alleging that the city violated their rights under the Takings Clause of the Fifth and Eighth Amendments to the Constitution by taking their properties to recover unpaid taxes without compensating them for approximately $289,000 in combined excess value the city collected at resale.

In 2021, Greenfield sold one of Woodbridge’s two parcels of foreclosed land, located at 87 Stone Ridge Lane, for $270,000 and kept the second parcel, which was valued at $50,200 in 2023. The city foreclosed on the parcels because Woodbridge owed $5,761 in taxes.

The city sold Browning’s property, valued at $109,900, for $34,000 in 2020 after Browning owed $1,578 in delinquent taxes. Neither Browning nor Woodbridge received any of the excess value the city attained from either sale.

The U.S. Supreme Court ruled the practice of so-called home equity theft illegal in 2023’s Tyler v. Hennepin County case in Minnesota. Massachusetts then ruled the practice unconstitutional last April, when Hampden County Superior Court Judge Michael Callan ruled that takings of excess equity violated Article 10 of the Massachusetts Constitution’s Declaration of Rights.

“The city had followed a practice in the past — like other communities across the commonwealth — where once they acquired property through tax foreclosure for failure to pay taxes, they would retain the surplus over the tax amount that was owed by the taxpayer,” Greenfield’s attorney Gordon Quinn told City Council on Wednesday. “In this particular case, on one of the parcels that was taken … the city acquired it and then sold it later for like $270,000 and pocketed the difference.”

At a Ways and Means Committee meeting Tuesday night, some councilors, including Precinct 4 City Councilor John Bottomley, spoke in favor of settling. Given that both the state and federal courts have ruled that the municipal taking of excess property value is illegal, Bottomley noted that following that decision would be “the right thing to do.” Precinct 3 City Councilor Michael Mastrototaro echoed these remarks.

“We don’t have much of a choice with this,” Mastrototaro said. “The precedent’s been set with the courts.”

Anthony Cammalleri can be reached at acammalleri@recorder.com or 413-930-4429.