Top Mass. Court Offers Suit Options for Buyers of Property Won in Dubious Foreclosure Cases
What’s a good-faith buyer to do if a foreclosed property purchased from a financial institution turns out to have been seized in a questionable court case?
That was the issue that the Massachusetts Supreme Judicial Court addressed today in litigation brought by a real estate developer who converted a foreclosed property into condos. And the answer wasn’t a good one, either for Francis J. Bevilacqua III or the individuals to whom he sold the condos, according to Bloomberg and the Boston Globe.
If title wasn’t property obtained by the financial institution in the underlying foreclosure case, subsequent buyers don’t have clear title and hence can’t sue to obtain a judgment that they do, the court held. But subsequent buyers can sue the entity that sold them the foreclosed property at issue. And they can also opt to re-foreclose against the last recorded owner.
“By alleging that U.S. Bank was not the assignee of the mortgage at the time of the purported foreclosure, Bevilacqua is necessarily asserting that the power of sale was not complied with, that the purported sale was invalid, and that his grantor’s title was defective,” explains the court in its written opinion. “In light of its defective title, the intention of U.S. Bank to transfer the property to Bevilacqua is irrelevant and he cannot have become the owner of the property pursuant to the quitclaim deed.”
While not the result that buyers were hoping for, today’s ruling does at least provide a road map for curing title issues, said attorney Jeffrey Loeb, who represented Bevilacqua.
“It’s going to be a longer and more expensive process for third-party buyers, but there’s a method out there to cure the problem,” he told the Globe. “It’s not necessarily the fix that my client and I were hoping for, but it is a fix, which is, bottom line, what everybody needed.”
The Massachusetts Real Estate Law Blog provides a copy of the opinion.
Additional and related coverage:
ABAJournal.com: “After Much-Awaited Mass. Foreclosure Ruling, Banks and Borrowers Continue with Existing Cases”
ABAJournal.com: “Mass. Homeowners in Foreclosure Can Challenge After the Fact, State Supreme Court Says”
Reuters: “Massachusetts court rejects developer bid in transfer case”
