In its recent decision (pdf) in Abate v. Fremont Investment & Loan, the Supreme Judicial Court (SJC) affirmed a Land Court judgment dismissing a foreclosed borrower’s “try title” action. “Try title” is a nineteenth century cause of action that allows an owner of land to force someone with an adverse claim to the land to either bring an action and prove his “better title” or forever hold his peace. The statute is M.G.L. c. 240, §§ 1-5. Since the onset of the current foreclosure crisis, mortgagees facing foreclosure have been using the try title mechanism to challenge the mortgage holder’s right to foreclose, often by contesting the validity of one or more assignments of the mortgage as it moved through the secondary market.
To bring a try title action, a plaintiff must allege that (1) he holds record title to the land, (2) he is in possession of the land, and (3) there is an actual or possible adverse claim. In Abate, the plaintiff’s mortgage had already been foreclosed. Nevertheless, Abate filed a try title action claiming that the original mortgagee’s assignment of the mortgage was “fraudulent, invalid, void and/or legally inoperative,” therefore the foreclosure itself was invalid and he was still the owner of the property.
The defendants, who were the foreclosing mortgagee and prior holders of Abate’s mortgage, moved to dismiss the case on the ground that his allegations were insufficient to show that the last assignment in the chain was invalid. Abate opposed the motion, arguing that under the two-step procedure typically used in try title actions, the question of who has “better title” must await the second step of the proceeding, in which the defendant becomes the plaintiff and, in a case such as this, must prove that his foreclosure was valid.
The Land Court allowed the defendants’ motion to dismiss, ruling that, in the first step of the procedure, the plaintiff must demonstrate at least the first two elements of the claim: record title and possession. This is necessary because, if either of those elements is in doubt, the court may not have jurisdiction to entertain the case in the first place. The Land Court held a hearing and, considering all the evidence, rejected Abate’s substantive claims and found that the last assignment – and therefore the foreclosure – was valid. Since Abate could not prove he had record title to the property, the court had no jurisdiction and the try title action was dismissed.
On appeal the SJC affirmed the Land Court’s judgment in all respects. The court agreed that the first two elements of the plaintiff’s case – record title and possession – must, if challenged by the defendants, be determined at the outset of the case, to establish the court’s jurisdiction. As to the third element – the existence of an adverse claim – the SJC held that, even if challenged, the plaintiff’s allegations should be presumed to be true, with resolution of that issue reserved to the second step of the procedure. In this way, the court noted, “we harmonize the two-step try title procedure with the traditional use of the rules of civil procedure as a device for raising jurisdictional issues before the court.”
Though in Abate the foreclosure had already occurred, the SJC went on to say:
Nonetheless, because the issue may arise in future try title actions between a mortgagor and mortgagee, we take this opportunity to resolve the conflict in the Land Court try title decisions on the adverse claim element of subject matter jurisdiction. We conclude that where a mortgagor challenges the right of the mortgagee to foreclose, the “adverse claim” element of a try title action is sufficiently alleged only if the foreclosure has already occurred.
By requiring mortgagors to wait until after foreclosure to file a try title action, and by allowing (if not requiring) defendants to challenge the mortgagor’s claims concerning the validity of the foreclosure at the outset of the case, the SJC has taken the try title mechanism off the table as a way to prevent a foreclosure, and has reduced its attractiveness as a means of delaying the mortgagee’s disposition of the foreclosed property. Both of these are salutary developments that should help accelerate the real estate market’s ongoing recovery from the foreclosure crisis.