Ibanez Land Court Ruling Update
Our office has been inundated with questions concerning the recent Massachusetts Land Court’s decision that has the whole real estate conveyanceing world in a state of turmoil throughout the Commonwealth. These were mainly procedural issues that were not followed (or were improperly followed) during the foreclosure process. But, beyond the procedural issues, there are also the real issues of whether or not a foreclosing entity had the rights to foreclose in the first place (as I will cover in my next blog posting).
Our office has received many phone calls and e-mails from real estate agents, brokers, sellers and buyers wanting some clarification as to what this decision means and how it will possibly affect them. One agent wrote to us the following:
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I am a real estate agent representing a husband and wife selling a two-unit residence in Worcester. We are currently under contract with a closing date of 6/25. However, I found out yesterday from the title company, that this property has an "Ibanez" cloud on the title. The assignment was recorded on February 20, 2008 one month after the foreclosure sale, with an effective date of September 11, 2007. My sellers purchased this property August of 2008. They do not have an owner's title policy (I had no idea they did not purchase one).
I have read the Land Court's ruling, and am wondering what is going to happen to my sellers and presumably hundreds of other sellers in the same situation. I know Judge Long ruled according to the letter of the law, but would this come under ex-post facto? What remedy do my sellers have? I do know where the previous, foreclosed owner lives (in Worcester ) and actually am on good terms with him. It has been suggested that he could provide a quit claim to my sellers and have the second's attorney provide a discharge to my sellers on the second lien (which would have gone away at the auction and would again if this had to go the re-foreclosure route). This is an absolute mess, and I cannot imagine how many hundreds of people this is going to affect.
Thank you for your time.
Sincerely,
Danielle Therrien
Century 21 Maher RE
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Thank you Danielle for your e-mail and thanks to everyone who wrote to us with similar questions and concerns surrounding this issue. Your input and inquiries are greatly appreciated!
The Land Court has accepted a motion to reconsider their decision and there has been no indication as to when the results of their reconsideration will be made. At this point (until the Ibanez case is final) what the “owner” seems to have (in the above example) is an un-foreclosed mortgage. The issue will be resolved either by a deed from the original mortgagor or by foreclosing the mortgage at this point. But, keep in mind, the deed from that owner will not wipe out prior encumbrances. Hopefully, the Land Court's final decision in the Ibanez case will take into consideration all of inequities that the original decision created. For now (if the current homeowner has no title policy to insure this situation) a deed from the prior owner or a re-foreclosure seems to be the only two options at this time.
I cannot stress enough the absolute importance of having buyers obtain Title Insurance for ANY purchase, but ESPECIALLY when purchasing a short-sale or bank owned (REO) property! This is vital protection that all buyers need to obtain (as further proven with this Land Court decision).
We will keep you posted with any new developments surrounding this case. In the mean time, should you have questions or concerns on how this decision may affect your particular set of circumstances, please consult with your own independent legal counsel or contact your title insurance company.
All the Best,
Rick D. Misitano, Senior Paralegal
Law Offices of James M. Bosco & Associates
Methuen Executive Park
240 Pleasant Street
Methuen, Massachusetts 01844
Phone: (978) 687-8804
Fax: (978) 687-8872
boscolaw@comcast.net
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