The big question for home owners – and bargain shoppers looking for real estate deals – is how safe is it to buy a foreclosure property right now? In a year or two, will someone be knocking on the door claiming ownership?
Up in Massachusetts, there is a court that is answering that question for us all. And while that court can only apply its state law, the power of its decision as a “secondary source” (legal speak for analogous case) cannot be underestimated. It’s easy to foresee that courts in a variety of other states, including Florida, may look to the Massachusetts analysis for guidance. The case itself is similar to thousands around the country: it involves a nice residential property, two men and a bank – US Bancorp, Francis Bevilacqua, and Pedro Rodriguez.
You can read the lower court opinion by Massachusetts Land Court Judge Keith C. Long here, which is being appealled right now to the Massachusetts Judicial Supreme Court after that high court agreed to take the case, bypassing the intermediate appellate court (something that this court apparently does in cases where the issues have a broad impact).
You can follow the Bevilacqua case through the Supreme Court review at the court’s official online docket. Currently, the first round of briefing is in process. It could be months before their opinion is written and released.
What is going on in the Massachusetts case of Bevilacqua v. Rodriguez?
The story behind this potential landmark case began a couple of years ago, when Francis Bevilacqua thought he was being a savvy investor, buying property on Summer Street in Haverhill, Massachusetts, that had been the subject of foreclosure by US Bancorp. Mr. Bevilacqua bought the residential property and turned into four condos. Which he sold.
However, last August Judge Long ruled that US Bancorp did not properly foreclose upon the property when it was owned by Pablo Rodriguez. Result? Mr. Rodriguez still has legal title to the real estate (the homeowner who had the mortgage with USBancorp).
After foreclosing, US Bancorp merely transfered a quitclaim deed to Mr. Bevilacqua, according to Judge Long. Since a quitclaim can only transfer the extent of ownership that is held, nothing was transfered to Mr. Bevilacqua because the bank had nothing to give. Kinda like someone selling you the Brooklyn Bridge.
Which means that those four families that bought the four condominiums that Mr. Bevilacqua remodeled and sold from this Summer Street property don’t own anything either. The deeds that they received from Mr. Bevilacqua were also unable to transfer any legal title — because of US Bancorp’s faulty foreclosure, which these folk may or may not have even been aware.
At least, that is where the law stands right now – unless the Massachusetts Judicial Supreme Court decides to change things. If the high court agrees with Long, however, then things are a really big mess – lawsuits will be needed to clear things up. How? In the words of Judge Long:
I have great sympathy for Mr. Bevilacqua’s situation — he was not the one who conducted the invalid foreclosure, and presumably purchased from the foreclosing entity in reliance on receiving good title — but if that was the case his proper grievance and proper remedy is against that wrongfully foreclosing entity on which he relied.
Which means that the innocent buyer from the bank is being told by the lower court to sue the bank. Which he has no choice but to follow through with at this point, because he can expect those condo owners to be filing suit against him very soon. They don’t have a choice, either. Unless the Massachusetts high court provides some relief. Stay tuned.