On April 4, 2011, the Supreme Judicial Court (SJC) heard argument in Bank of New York v. Bailey, another case arising from the foreclosure crisis.  Unlike some of the other recent cases, this one does not involve an Ibanez question.

Following a foreclosure, the foreclosed mortgagor sought to stop the bank’s follow-on eviction action.  The mortgagor claimed that

Another case arising from a premature foreclosure is headed to the SJC.  Judge Keith Long, whose Land Court decision was affirmed in U.S. Bank National Association v. Ibanez (see related commentary here), also decided Bevilacqua v. Rodriguez (pdf).  The plaintiff in Bevilacqua was an innocent third-party buyer of a property foreclosed by a bank before the bank had received an assignment of the mortgage.  In an effort to clear his title, the buyer filed an “action to try title” in the Land Court.  In short, this type of case is an attempt to force the other party to show that it has title to the land.  Judge Long ruled in a straightforward manner that, due to the defective foreclosure, the plaintiff never received title to the land.  As a result, the plaintiff could not use the try title statute to force the original mortgagor to prove his title. 

In late December 2010, just a few weeks before issuing its decision in Ibanez, the Supreme Judicial Court (SJC) granted the buyer’s request for direct appellate review in Bevilacqua.  The SJC has invited amicus briefs on the following issue:  “Whether a Land Court judge correctly dismissed a petition under G. L. c. 240, § 1, to ‘try title’, where the plaintiff held a quitclaim deed conveyed after an invalid foreclosure sale of the property by U.S. Bank National Association, which did not hold the mortgage at the time of the sale.”  

An SJC affirmance of Judge Long’s Bevilacqua decision would not leave innocent purchasers without a remedy.  We recently represented an individual who bought property from a bank that had conducted a foreclosure sale before it held an assignment (the fact that our buyer purchased before the Land Court’s Ibanez decision did not save him from the impact of that case).  Past Massachusetts cases, such as Kaufman v. Federal Nat’l Bank and Holmes v. Turner’s Falls Co., have held that a bank’s invalid deed at a foreclosure sale acts as an assignment of that bank’s rights.  Relying on these cases, we obtained a Land Court ruling that our client was now the holder of the improperly foreclosed mortgage.  This judgment has put our client in a position to foreclose correctly on the property, with the ability to bid in the outstanding balance of the mortgage note at the new foreclosure sale.  This approach is not a perfect solution for a buyer who purchases property after a botched foreclosure.  But, it does provide a way forward in the wake of Ibanez.

Oral argument of Bevilacqua is tentatively scheduled for May 2011.  According to Jeff Loeb, Bevilacqua’s counsel, this date was chosen to permit the SJC to hear that appeal along with two other cases in which it has granted direct appellate review: Federal Nat’l. Mortgage Assn. v. Nunez  (pdf) and Deustche Bank Nat’l. Trust Co. v. Matos (pdf) (the Matos appeal was dismissed voluntarily by the parties on Valentine’s Day).  Those cases address the effective date and impact of M.G.L. c. 186A, “Tenant Protections in Foreclosed Properties.”  This new statute was added by Section 6 of Chapter 258 of the Acts of 2010 and took effect on August 7, 2010.


Continue Reading