Massachusetts Amends Provisions Clearing Titles to Foreclosed Properties
By Laura Eckstein, J.D.
December 2, 2015 Massachusetts amended provisions clearing title to foreclosed properties and foreclosure sales involving an arm’s length purchaser. These provisions are effective December 31, 2015.
M.G.L. c. 244 § 15
The amendments to chapter 244 of the General Laws strike out section 15 as appearing in the 2014 Official Edition, and add subsections (a) through (f).
Arm’s Length Purchaser
An arm’s length third party purchaser for value is defined as “an arm’s length purchaser who pays valuable consideration, including a purchaser’s heirs, successors and assigns, but not including the foreclosing party or mortgage note holder or a parent, subsidiary, affiliate or agent of the foreclosing party or mortgage note holder or an investor or guarantor of the underlying mortgage note including, but not limited to, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the Federal Housing Administration.” Additionally, deadline is defined as three years from the date of the recording of the affidavit.
Recording an Affidavit
After the sale, the seller shall record a copy of the notice and an affidavit particularly states the person’s acts in the registry of deeds for the county or district in which the land lies, with a note of reference of the record of the mortgage deed if it is recorded in the same registry. The affidavit or a certified copy of the record shall be admitted as evidence that the power of sale was duly executed if the affidavit shows that the requirements of the power of sale and the law have been complied with.
Affidavit as Conclusive Evidence
Three years from the date of the affidavit’s recording it will be conclusive evidence in favor of an arm’s length third party purchaser for value at or subsequent to the foreclosure sale that the power of sale under the foreclosed mortgage was duly executed and that the sale complied with this chapter and section 21 of chapter 183. Further, an arm’s length third party purchaser for value relying on an affidavit will not be liable for a foreclosure if the power of sale was not duly exercised.
Under subsection (d), subsection (c) will not apply if an action to challenge the validity of the foreclosure sale has been commenced by a party entitled to notice of sale under section 14 or a challenge has been asserted as a defense or a counterclaim, including in the housing court department pursuant to section 3 of chapter 185C, and a copy of the complaint or pleading has been duly recorded before the deadline in the registry of deeds for the county or district in which the subject real property lies or in the land court registry district before the deadline. Subsection (c) also does not apply if a challenge to the validity of the foreclosure sale is asserted as a defense or counterclaim by a party entitled to notice of sale under section 14 who continues to occupy the mortgaged premises as their principal place of residence, regardless of whether the challenge was asserted prior to the deadline, and a copy of any pleading asserting the challenge was duly recorded before the deadline in the registry of deeds for the county or district in which the subject real property lies or in the land court registry district within 60 days from the date of the challenge or before the deadline, whichever is later. After the entry of a final judgment and the final resolution of any appeal, the affidavit will immediately become conclusive evidence of the validity of the sale. If the final judgment concludes that the power of sale was not duly exercised, the foreclosure sale and the affidavit are void.
Liability
Subsection (e) states that the recording of an affidavit and the expiration of the deadline does not relieve the affiant from any liability for failure to comply with this section, section 14 or any other requirement of law with respect to the foreclosure. Additionally, a material misrepresentation contained in an affidavit shall constitute a violation of section 2 of chapter 93A.
About the Author
Laura Eckstein, J.D is a Regulatory Compliance Consultant at Bankers Advisory. She is a graduate of the University of Rhode Island and earned her Juris Doctor at Suffolk Law School. She is admitted to the Bar in Massachusetts and New Hampshire. She may be reached at laura.eckstein@bankersadvisory.com
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