Real Estate: Lack of Physical Possession Does Not Invalidate Foreclosure

A Land Court Judge held a mortgage lender established possession of property despite inactivity on the premises for almost 20 years.  The court found the lender, a now fee simple owner of property, had established possession by entering for the purpose of foreclosure, recording a certificate pursuant to Massachusetts’ statutory requirements, and maintaining peaceful possession for three years.

Judge Keith Long Stated, “After making peaceful entry following the breach of a mortgage condition, and recording his certificate, [the defendant] did “all that is necessary to affect a foreclosure.”

Currently, there are two methods of foreclosing property in Massachusetts — power of sale and foreclosure by entry.

Power of sale

Power of sale is the most common and quickest method of foreclosure in Massachusetts. Usually held at foreclosure auctions, power of sale requires that sales be made pursuant to the power of sale clause in the mortgage.  In Massachusetts, notice of the foreclosure must be published and mailed to the borrower. There is no requirement for the borrower to actually receive the notice, merely for the lender to make a diligent effort to locate the borrower.  The actual sale must be conducted at the date, time, and place specified in the notice.  A proper sale prevents the borrower from exercising any right to reclaim the property through redemption.

Foreclosure by entry

A less common method of foreclosure, foreclosure by entry, allows lenders to foreclose by lawfully taking possession of a premise for a statutory required 3 years. After which, the title will have the lenders name.  Lawful recovery of possession can be done in 3 ways:

  1. Lender may file a lawsuit and obtain a court order granting possession
  2. Lender may enter peaceably and take possession or
  3. Lender may obtain borrower’s proper consent to entry.

The statutory language of Massachusetts’ foreclosure by entry statute, G.L.c. 244 §1 allows recovery of possession “by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it … and possession so obtained, if continued peaceable for three years from the date of recording of the memorandum or certificate as provided … shall forever foreclose the right to redemption.

Judge Long concluded that though it was conceded that the defendant never had physical control over the property, under G.L.c. 244 §1 it wasn’t required.   Further in interpreting past court decisions, Long notes that courts “have long held that a mortgagee who has made peaceful entry on the property and duly recorded a certificate of entry need not do anything further to establish possession.”

“Long added, that once possession has been “acquired by peaceable entry and the recording of the certificate in the registry of deeds, that possession continues until the mortgagor takes some act that is adverse to the mortgagee’s possession.  Absent proof of some act done to defeat or interrupt the mortgagee’s possession, the mortgagor is treated as a tenant at will of the mortgagee, and ‘they are assumed to hold under him, and their possessions are his, during the three years, until the completion of the foreclosure.’”

Here, Plaintiff failed to establish an adverse possession claim or to prove that defendant’s possession was interrupted.  As a result, the court held that Defendant did all that was required to establish foreclosure proceedings despite inactivity on the premise.

 The Case is:HS Land Trust v. Gonzalez, Lawyers Weekly No.14-077-12

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