February 20, 2016 Practice Points

Massachusetts Enacts Legislation to Cure Title Defects Caused by Ibanez and its Progeny

Governor Charlie Baker has signed Senate Bill No. S2015 into law

by Kendra L. Berardi

In the latest twist to the foreclosure roller coaster in Massachusetts, Governor Charlie Baker has signed Senate Bill No. S2015 into law.

Effective as of December 31, 2015, the new legislation, entitled “An Act Clearing Titles to Foreclosed Properties,” is an effort to cure title defects caused by the Massachusetts Supreme Judicial Court’s decisions in U.S. Bank National Association v. Ibanez, 458 Mass. 637 (2011) and the line of cases that followed, which have been the subject on articles on this site. In Ibanez, the court ruled that foreclosing banks were not statutorily authorized to foreclose because the mortgages in question had not been assigned to them at the time of the foreclosure. Applied retroactively, the Ibanez decision called into question the status of third-party purchasers of those foreclosed properties, creating a cloud on the title of likely thousands of properties in Massachusetts. Since 2011, attorneys in Massachusetts have made several efforts to clear these titles, largely without success. See, e.g., Bevilacqua v. Rodriguez, 460 Mass. 762 (2011).

Help for third-party buyers has finally come in the form of new legislation that establishes deadlines for claims asserting that a foreclosure was conducted in violation of the Court’s Ibanez decision. Those deadlines run from the recording of a properly executed affidavit of sale. Specifically, for affidavits of sale recorded prior to December 31, 2015, the statute sets the deadline for the filing of a claim as (a) three years following the recording of an affidavit of sale, or (b) December 31, 2016, whichever is later. For affidavits of sale recorded on or after December 31, 2015, the statute sets the deadline as three years following the recording of an affidavit of sale.

Importantly, the statutory deadline protects only third-party purchasers , which the statute defines as “an arm’s length purchaser who pays valuable consideration.” By definition, that also includes the purchaser’s heirs, successors, and assigns but expressly excludes the foreclosing party or mortgage note holder, or their parents, subsidiaries, affiliates, or agents, or any investors or guarantors of the mortgage note.

While the legislation went into effect as of December 31, 2015, opponents of the bill, including the Massachusetts Alliance Against Predatory Lending (MAAPL), made an effort to challenge the new deadlines by petitioning to repeal the law. After a review of the petition, Attorney General Maura Healy, in a letter addressed to Secretary of State William Galvin, opined that the legislation cannot lawfully be the subject of a referendum petition. The basis for the attorney general’s opinion is the rule stating that laws relating to the power of the courts cannot be subject to a voter referendum.

As a result, this legislation, which expands the powers of the housing court to “defenses or counterclaims by any party entitled to notice of sale under [G. L. c. 244, § 14] or by any party entitled to notice of sale and who continues to occupy the mortgaged premises” could not properly be the subject of a referendum petition. As a result, the challenge to the new legislation has been thwarted, for the moment. It remains to be seen whether the MAAPL, or other opponents of the law, bring a challenge to the legislation in a different form. In the meantime, the first titles clouded by Ibanez will be cleared less than a year from now.

Kendra L. Berardi is an associate with Robinson & Cole LLP, in Boston, Massachusetts.


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