The Martha’s Vineyard Land Bank Commission reached a consensus to wait until Land Bank staff presents a report about possible alternatives for an M exemption penalty charge. The $715,000 M exemption is designed to help first-time homebuyers purchase a house. First-time homebuyers who have received an M exemption have a lien recorded at the Dukes County registry of deeds against their property. The lien is to ensure the Land Bank will be notified if the owner attempts to sell the property before a five-year residency requirement has been completed.
According to Land Bank executive director James Lengyel, the Tisbury Land Bank advisory board recently discussed the process the Land Bank takes when a home is sold within those five years when an M exemption is in effect. Lengyel said the homebuyer would be liable for the original fees, the penalty, and interests if they back out of it “prior to the five-year period,” which can happen if someone does not comply with the M exemption, or people’s circumstances change, such as in a divorce. The amount someone may pay is “several thousand dollars,” according to Lengyel. Land Bank office manager Maureen Hill told The Times the penalty is 25 percent of the fee.
“It is the Land Bank’s custom to extinguish half of the interest. The interest is a statutory 14 percent,” Lengyel said. “The board wondered, are there alternatives to charging half the interest rate? Is there something the Land Bank should be charging perhaps less?”
Lengyel continued by saying a possible option is to charge only the interest, and made a point of saying the Land Bank “receives these receipts” to spend them, not to invest them. “I think what’s really at stake is the opportunity cost,” Lengyel said, adding other alternatives include looking at a composite of mortgage rates, or using the prime rate.
Edgartown commissioner Steven Ewing felt the Land Bank should not be “overly onerous, but if people are trying to pull a fast one, yeah, get the interest.”
“It seems to me a lot of this stuff is individually specific,” Ewing said.
Commission chair and Chilmark commissioner Pamela Goff suggested Land Bank staff look into the matter before the commissioners make a decision. Aquinnah commissioner Sarah Thulin agreed that more information is needed.
“I don’t see any reason to really change anything,” Thulin said.
Lengyel clarified that if changes are made, they would not apply retroactively.
Meanwhile, the commission unanimously voted to send a letter of support for the Tisbury open space committee’s application to the Community Preservation committee for funds “to establish blue trails in both Lake Tashmoo and Lagoon Pond.”
