On August 4, 2011, the Supreme Judicial Court of Massachusetts rendered a decision in the Bank of New York, et al. v. KC Bailey matter.  In Bailey, Bank of New York (the “Bank”) believed that it held title to a foreclosed property pursuant to a recorded deed. After purchasing the Premises, the Bank instituted a summary process action in the Boston Housing Court to regain possession from the former owner who still resided at the Premises. The former owner raised the defense that the foreclosure sale was not conducted properly and therefore he still held title to the Premises. The Housing Court Judge held that the Housing Court did not have jurisdiction to hear the former owner’s challenge to the Bank’s title.

On Appeal, the Supreme Judicial Court held that the Housing Court does have jurisdiction to hear challenges to title raised as a defense in post-foreclosure summary process actions and sent the case back to the Housing Court for a determination of title to the Premises.

This is an important ruling for both owners and former owners of foreclosed properties. By allowing tenants to challenge the purchaser’s title as a defense in summary process matters, the purchaser has a heavier burden to satisfy at trial. This case further illustrates the risks inherent in purchasing distressed property and the need for competent counsel to assist buyers of foreclosed properties in both the purchase and any subsequent eviction actions.

If you have questions about Massachusetts real estate laws or concerns about the foreclosure and eviction process in Massachusetts, and would like to consult an experienced Massachusetts real estate lawyer, contact Attorney Ted Cannon to schedule a consultation.