Bevilacqua v Rodriguez (Of Note)

Summary: Assignment to MERS recorded after MERS began a foreclosure case meant that MERS had no authority to bring the foreclosure case and it was void.

Bevilacqua v Rodriguez, 460 Mass. 762, 955 NE2d 884 (2011).

Facts: On March 18, 2005, Pablo Rodriguez (Rodriguez) granted a mortgage to Mortgage Electronic Registration Systems, Inc. (MERS), as a nominee for Finance America, LLC.  The mortgage was recorded at the Southern Essex registry of deeds (registry).  As of June 29, 2006, MERS had not assigned the mortgage to U.S. Bank National Association (U.S. Bank).  Despite this, U.S. Bank executed a foreclosure deed referencing the mortgage and claiming to transfer the property from U.S. Bank (as trustee of a trust that is not described) to U.S. Bank as “Trustee under the securitization Servicing Agreement.”  On July 21, 2006, MERS assigned the mortgage to U.S. Bank, which was recorded at the registry.  On October 9, 2006, U.S. Bank granted a confirmatory foreclosure deed to U.S. Bank as trustee under the securitization agreement.  On October 17, 2006, U.S. Bank as trustee granted a quitclaim deed to Francis Bevilacqua, III (Bevilacqua).

Bevilacqua filed a petition to require Rodriguez to try title to the property, that is, to compel him to bring a claim or bar him from making an adverse claim in the future.  Bevilacqua claimed to reside at the property and to hold record title, but because MERS did not assign the mortgage at the time of the foreclosure, Bevilacqua claimed that there was a cloud on his title, and therefore a possibility that Rodriguez could bring an adverse claim against title to the property.

The Land Court decided that Bevilacqua did not hold record title to the property, and therefore dismissed the case because possession and record title are required elements of a cause of action to try title.  Bevilacqua appealed.

Holding: The appellate court held that Bevilacqua did not hold record title to the property, and therefore the Land Court correctly dismissed the case.  However, the dismissal should have been without prejudice.

The court assumed that Bevilacqua had possession of the property.  Bevilacqua claimed to hold record title through the quitclaim deed from U.S. Bank.  Bevilacqua argued that either the quitclaim deed was sufficient itself to establish record title, or the quitclaim deed plus the chain of deeds was sufficient.

The court rejected the first theory, holding that a single deed considered without reference to its chain of title is insufficient to show record title.  If allowed, this would permit someone to record a deed at the registry, commence suit, and if the owner ignores the suit or cannot be found, the person would get a default judgment.  This illuminates the issue that the mere registry of a meaningless deed cannot give it a legal effect.

The second theory was that the quitclaim deed plus the chain of deeds were sufficient to have standing.  This can be broken into three possible interpretations.  Bevilacqua could have standing as either the owner of property, an assignee of the mortgagee, or as a bona fide purchaser for value (BFP).

In determining whether Bevilacqua held record title under the theory that he is owner of the property through the chain of deeds, it is important to note that Massachusetts law holds that a foreclosure sale in the absence of authority is wholly void. Bevilacqua claimed that the foreclosure by U.S. Bank was without right.  This meant that the transaction was void, and the grantor’s title was invalid.  In light of the defective title, U.S. Bank’s intention to transfer the title was irrelevant.  The claim that Bevilacqua’s title was clouded necessarily defeated the claim that the chain of deeds gave Bevilacqua record title.  For this reason, the court rejected this theory.

The court then considered whether Bevilacqua had record title as an assignee of the mortgagee.  For the analysis of this theory, it is important to note that Massachusetts is a title theory state in which the mortgagee gets “legal title” and the mortgagor gets an “equitable title.” The appellate court held that the foreclosure deed cannot act as an assignment to Bevilacqua because he was not a party to the foreclosure.  The court assumed, without deciding, that Bevilacqua was assigned the mortgage by way of the quitclaim deed.   The court rejected this theory because the type of relief that Bevilacqua requested was inconsistent with the principles of mortgages, namely, the equity of redemption.  The mortgagee’s title is defeasible, and the mortgagee’s interest in the property comes to an end upon payment of the note. The equity of redemption holds that a mortgagor can redeem the mortgage obligation after its due date. Furthermore, the equity of redemption is inseparable from the mortgage. This means that the mortgage, by its nature, requires two complimentary claims to the property that do not survive each other or the mortgage.  Therefore, to assert that Bevilacqua has record title by means of having a mortgage on the property, he has to assert that Rodriguez has at least the equity of redemption.  This would mean that Rodriguez’s claim was not adverse to Bevilacqua’s.  If Rodriguez’s claim was not adverse, then Bevilacqua did not have standing.  Because of this, the court rejected the assignment of mortgage theory as a way of holding record title.

The third possibility was that Bevilacqua held record title as a BFP.  While a BFP is often protected, there are instances in which the BFP, and not the original owner, must seek recovery from a third party rather than being awarded the property itself. This generally turns on whether the transaction is void, and therefore never left possession of the original owner, or voidable, in which case the BFP may take good title. As stated earlier, foreclosures conducted without right are void.  The court held that this would be an instance in which the BFP does not have good title, and consequently, does not have record title.  Furthermore, the court held that Bevilacqua cannot claim to be a BFP.  While Bevilacqua claimed that the dates were not put on the documents, all registry documents are ordered by date, and therefore Bevilacqua should have known that U.S. Bank foreclosed on the property before it had a right to do so.  For these reasons the court rejected the BFP claim, and therefore held that Bevilacqua did not hold record title.


Opinion Year: 
Of Note
By: ATG Underwriting Department | Posted on: Mon, 07/02/2012 - 3:00pm