We’ve just learned – and are thrilled to announce – that Massachusetts Governor Deval Patrick today nominated our long-time Rackemann colleague and Massachusetts Land Use Monitor author Bob Foster as the next Associate Justice of the Massachusetts Land Court! Congratulations to Bob on this distinct and well-deserved honor, and congratulations to Governor Patrick on a stellar nomination. The Governor’s
Last week the Massachusetts Supreme Judicial Court (SJC) heard oral argument in the Bevilacqua and Nunez appeals (see our prior comment here). In a measure of its interest in Ibanez-related issues, the court permitted amici on both sides of Bevilacqua – the Mortgage Bankers Association and the Massachusetts Attorney General, respectively – to participate in the argument.
A few observations follow:
Bevilacqua concerns an action to try title started by a party who bought property from a bank after the bank foreclosed on that property. The bank didn’t hold an assignment of record at the time of the foreclosure, raising serious questions about its validity under the SJC’s recent Ibanez decision. With some minor exceptions, everyone in Bevilacqua seemed to agree that a foreclosure sale by a party before it became the assignee of the mortgage (a premature foreclosure) effectuated an assignment of the mortgage to the buyer. There also was agreement that the plaintiff-buyer might have other remedies, such as seeking damages from the foreclosing bank, or rescission. (Note that these remedies might not help subsequent buyers, who would have limited rights under quitclaim covenants).
The thrust of the buyer’s position was that the court should take a narrow view of the meaning of record title, since the relevant instruments (including an assignment of the mortgage) were now on record. The buyer argued that he had a sufficient record title in the property to warrant discovery on the issue of whether there had been an off-record assignment of the mortgage to the foreclosing bank before the foreclosure sale.
For the most part, the court’s questions reflected a concern that a buyer from a bank that did not itself hold title could not become an owner (the “how’d you like to buy the Brooklyn Bridge” problem). This concern led to a discussion of whether the title acquired in a premature foreclosure sale was void, or merely voidable, and the possible ramifications of each outcome on an innocent buyer who did not recognize the Ibanez issue at the time of his purchase.
The Attorney General was insistent that a ruling for the buyer would unduly expand the action to try title.
With some notable exceptions, the court seemed inclined to rule against the buyer. Given the number of issues the justices raised, it will be interesting to see the grounds for their decision.
The Nunez case seems easier to call. After foreclosing and taking title, Fannie Mae filed a summary process (i.e. eviction) action. That case was pending when M.G.L. c. 186A, which contains new requirements for evictions by foreclosing parties, became effective. It was not disputed that this new statute would require dismissal of the summary process case and leave Fannie Mae unable to evict. The justices appeared to agree that, as a result, Chapter 186A affected Fannie Mae’s substantive rights and should take effect only prospectively.
A brief announcement: I will be chairing the Land Court Bench Meets Bar Conference at the Boston Bar Association on Tuesday, April 5th from 4:00-7:00. We will hear from Chief Justice Karyn Scheier, Justice Keith Long, Justice Gordon Piper, Recorder Deborah Patterson and Chief Title Examiner Edmund Williams. This is a great opportunity to hear…
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.
The Massachusetts Land Court is in the process of moving out of its home for the past seven years — the office building at 226 Causeway Street, near the Boston Garden. The court is moving into space on the 4th, 5th and 11th floors of the “new” (1937) Suffolk County Courthouse at Three Pemberton Square (the high-rise pictured at left), which is attached to…