The Massachusetts Supreme Court has released its decision in a foreclosure fraud case that may impact mortgage holders as well as buyers of foreclosed properties in Florida and across the United States.
Back in January 2011, we along with other real estate attorneys and state court judges from all over the state and the rest of the country began monitoring a test case out of Massachusetts. Why? When novel situations present themselves in the law and there isn’t precedent in our own locale or jurisdiction on an issue, like we are seeing with the Foreclosure Fraud crisis, both judges and attorneys will look to what courts have done in other states for guidance.
This means that the case in Massachusetts may be important to everyone in Florida, because Florida judges may follow the lead of the Massachusetts Supreme Court in the case of Belvilaqua v. Rodriguez. Judges here may see no need to reinvent the wheel and follow the logic that the Massachusetts judges used in their case.
What happened in the Massachusetts Case?
The details of that case, where Mr. Bevilacqua sued Mr. Rodriguez to clear the title to a house he had bought at a foreclosure sale, are here in our earlier post, ” Are Home Buyers Really the Legal Owners of Foreclosure Homes? Maybe Not: Legal Title May Remain With Foreclosed-Upon Homeowner.” From that post:
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 it 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 transferred 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 transferred 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 — all because of US Bancorp’s faulty foreclosure, which these folk may or may not have even been aware of.
For now, that is where the law stands – 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.
What Does It Mean For Florida?
The Massachusetts Supreme Court has ruled that Judge Long was correct — and now news media all across the country are reporting that buyers should be aware that the homes they buy may not have good title, which means that they may not have bought real estate at all. No one can sell what they don’t own. If a seller does not have clear title to a piece of land, then that seller cannot sell clear title to that piece of land.
That is what the Massachusetts case is holding and it’s pretty analogous to the position of longstanding Florida real estate law on title to property. What does that mean? It means that Florida real estate sales – some in the future, some that have already taken place – may be shams.
If you are considering buying real estate in Florida, it’s extremely important that you get legal guidance before doing so. Similarly, if you are selling property in Florida, you need to make sure that you are not exposing yourself to a future lawsuit by the buyer.
It’s the Wild Wild West right now in Florida land titles thanks to widespread Foreclosure Fraud, and now is not the time to be a market maverick.
re: protection for the buyer:
Isn’t this what (overpriced) title insurance is all about?