The Massachusetts Supreme Judicial Court (“SJC”) has ruled that Massachusetts property owners may lack standing to establish title to their property where there is a void foreclosure sale in the chain of title. The Massachusetts “try title” statute permits a holder of “record title” in possession of property to file a petition to force adverse claimants to defend their purported interest in the property. In Bevilacqua v. Rodriguez, the SJC held that a third-party purchaser of foreclosed property did not hold record title where no assignment of mortgage to the foreclosing entity had occurred at the time of foreclosure. Absent such an assignment, the foreclosure sale was invalid, and the foreclosing entity had nothing to convey to the third-party purchaser. Taking nothing from the foreclosing entity, the third-party purchaser lacked standing to maintain a try title action against the original mortgagor. Nonetheless, the scope of the ruling is likely limited to Massachusetts and jurisdictions where a mortgagee or its assigns must initiate foreclosure and where the party bringing the foreclosure action did not obtain an assignment of the mortgage until after the commencement of the foreclosure process. Moreover, because the Bevilacqua decision simply applies the law as already articulated by the SJC in its January 2011 U.S. Bank, N.A. v. Ibanez opinion, its impact on current and ongoing foreclosure practices appears limited. Massachusetts foreclosure attorneys are likely to have already altered their assignment practices in light of Ibanez.
To view the complete alert online, click here.