An Act Clearing Titles To Foreclosed Properties
By Scott A. Joseph, December 3, 2015
As of November, 25th, there is a new law in Massachusetts entitled An Act Clearing Titles To Foreclosed Properties. Chapter 141 of the Acts of 2015 (“Chapter 141”) is also known as the Foreclosure Bill or the Ibanez Bill. This new law is expected to alleviate the uncertainty in foreclosure titles which began with the Ibanez decision.
1) Chapter 141 protects “arm’s length purchasers for value” against challenges from foreclosed borrowers who no longer occupy the property, by establishing a time limit for them to challenge the admissibility of the foreclosure affidavit which is executed and recorded pursuant to M.G.L.C. 244, §15 (“the foreclosure affidavit”). Under current law, the foreclosure affidavit is admissible as prima facie evidence in the event of a later challenge. But under Chapter 141, the foreclosure affidavit shall be conclusive evidence in favor of such purchasers unless there is a challenge within three (3) years of the date of its recording.
2) If the foreclosure is challenged, it is necessary to do so in the context of a legal action and a true and correct copy of the complaint or pleading must be recorded in the Registry or filed with the Registry District of the Land Court where the land is located.
3) Under Chapter 141, the three (3) year time limit does not apply to foreclosed borrowers who continue to occupy the property as their principal residence. Such borrowers can challenge the veracity of the affidavit at any time, by commencing their own actions or as a defense or counterclaim, including eviction proceedings.
4) The three (3) year time limit of Chapter 141 for challenging the foreclosure affidavit dovetails with the three (3) year period for opposing a foreclosure by entry.
5) Although the effective date of Chapter 141 is December 31, 2015, it will not immediately cure titles coming through power of sale foreclosures. This is because the “deadline” for challenging the foreclosure is “3 years from the date of recording of the affidavit or 1 year from the effective date of this act, whichever is later.” During this one (1) year period, the Attorney General’s office and Commissioner of Banks will work with “stakeholders” in the foreclosure process to notify borrowers who may be affected by Chapter 141 of its effects.
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