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Distressed Homeowners Lose Key Defense, While Foreclosure Purchasers Gain More Title Security
Last month, the Supreme Judicial Court decided yet another important foreclosure case, U.S. Bank v. Schumacher [enhanced version available to lexis.com subscribers]. The issue considered in Schumacher was whether a foreclosing lender’s defective 90 day notice to cure was a defense in a subsequent post-foreclosure eviction (summary process action) by the borrower. The SJC said no it was not a valid defense, as it should have been raised much earlier in the legal process in a separate action in the Superior Court.
Schumacher considered a 2007 law requiring that foreclosing lenders provide a borrower with a 90 day right to cure prior to starting a foreclosure proceeding. Before Schumacher, some trial courts had ruled that a bank’s failure to strictly comply with those requirements was fatal to a foreclosure sale. In such cases, even a post-foreclosure buyer of the property would have potentially defective title. From a title perspective this result was especially problematic since a bank’s compliance or non-compliance with §35A [enhanced version available to lexis.com subscribers], would not appear in the property’s title at the registry of deeds.
By holding that a defective cure notice is no defense to a post-foreclosure eviction, the SJC has made it more difficult for distressed homeowners to challenge the legality of foreclosures in eviction cases. On the flip side, the ruling will help buyers of foreclosed property as it makes their titles less susceptible to challenge by the previous owners.
View more from The Massachusetts Real Estate Law BlogLaw By Richard D. Vetstein, ESQ
Mr. Vetstein has represented clients in hundreds of lawsuits and disputes involving business, real estate, construction, condominium, zoning, environmental, banking and financial services, employment, and personal injury law.
In real estate matters, Mr. Vetstein handles residential and commercial transactions and closings. In land use, zoning, and licensing matters, Mr. Vetstein offers his clients an inside perspective as a former board member of the Sudbury Zoning Board of Appeals. Mr. Vetstein has an active real estate litigation practice, and was a former outside claims counsel for a national title company.
Drawing on his own business degree and experience, Mr. Vetstein assists his business clients with new business start ups, acquisitions, sales, contract, employment issues, trademarks, and succession planning. Mr. Vetstein also litigates, arbitrates and mediates a wide variety of commercial disputes.
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