Acting in response to last week’s removal  of the Occupy Wall Street, er, Occupants from, well, Wall Street, a Suffolk county judge ordered that the City of Boston obtain the court’s leave prior to relocating the current Occupants of Boston back to their dorm rooms.  The order is temporary, and the judge intends to hear arguments on the merits in early December.  While the Commonwealth has enjoyed a particularly temperate autumn, average temperatures dropped precipitously last week – a fact that, coupled with Dewey Square’s  proximity to the Harbor, may see to it that the issue becomes moot.  As one Occupant wrote: “Mom – protest’s gr8 but freeeeeeeeezing lol (^_^) – pls send fleece and UGG boots (check bedroom next to Xbox)!!!  GTG – c u at xmas :-)”.

Ironically, just last month the Supreme Judicial Court of Massachusetts  had a decidedly different reaction to one homeowner’s occupation of Massachusetts real estate – and in the process cast doubt on the state of title for thousands of owners of foreclosed homes.  In late October, the SJC decided Bevilacqua v. Rodriguez, 955 N.E.2d 884 (Mass. 2011), extending its holding in Ibanez to a (former) homeowner that had purchased REO from a securitization trust [See here for our prior thoughts on the Ibanez case].  

The facts of Bevilacqua are, by now, too-familiar: a securitization trustee executes a foreclosure deed in June, 2006 but doesn’t take assignment of the mortgage from MERS until three weeks later (an assignment that, importantly, is actually placed of record).  Under Massachusetts statute, only a mortgagee or its executors, administrators, successors or assigns can execute foreclosure – the late assignment meant the trust had foreclosed before it owned the mortgage, invalidating the resulting transfer.  And, in Massachusetts, you (usually) can’t sell what you don’t own. 

On appeal, Bevilacqua argued, among other things, that he should be entitled to the protections against adverse claims afforded a bona fide purchaser purchasing for value – a legal theory protecting unwitting purchasers who take title without notice or knowledge of a defect in the power of vendor to sell.  The Court rejected this argument – a scrub of the Registry’s records would have shown the trustee to be, at various times during the summer of 2006, either a complete stranger to title, a mere assignee of a mortgage, or a party that had foreclosed in error.  (It’s interesting to note that at least part of the Court’s analysis here rests on the fact the assignment from MERS to the trustee was placed of record – something the Ibanez court found that, while good practice, was unnecessary as a matter of Massachusetts law.)  

Like Ibanez, the Bevilacqua decision seems exactly right on the merits and exactly wrong in practice, and will almost certainly result in corrective legislative action to prevent the divesture of thousands of innocent – albeit decidedly not bona fide – purchasers of foreclosed Bay State homes. 

As an aside, in divesting Bevilacqua, the SJC made a point of relaying the Land Court’s observation that accepting Bevilacqua’s theory that his deed was sufficient to establish record title would render the “Brooklyn Bridge” problem insoluble.  As the Land Court wrote: “in the classic example, a litigant could go to the registry, record a deed to the Brooklyn Bridge, commence suit, hope that the true owners ignored the suit or … could not be readily located and [would thus] be defaulted, and secure a judgment.”  Of course, last Thursday, that same crafty litigant would have found his bridge teeming with thousands of displaced Occupy Wall Street Occupants – a scenario the legal ramifications of which confound the mind.

As one Occupant wrote:  “Dude, where’s my title policy?” 

By Matthew Clark and David Pildis