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New MA Foreclosure Law

With local foreclosures on the rise for the past few years, the Massachusetts Legislature has decided to take a stand. A new law, signed into law on August 7, protects residential tenants in foreclosed properties from being evicted except for reasons of “just cause.” The law also temporarily extends a defaulting mortgagor’s 90-day “right-to-cure” to 150 days through 2015. This is intended to give homeowners and their lenders additional time to negotiate new terms to a mortgage to help avoid foreclosure. In addition, the legislation criminalizes residential mortgage fraud.

The law applies exclusively to foreclosing lenders and prohibits banks and mortgage lenders from issuing wholesale eviction notices to tenants in foreclosed buildings.  Specifically, it states that the foreclosing lender/mortgagee of residential rental property (any number of units) may not evict an existing legal tenant except on one of the following two conditions: (1) the foreclosing owner has signed a binding Purchase & Sale Agreement with a bona fide, arm’s length buyer; or (2) the tenant has given “just cause” to be evicted (i.e. failure to pay rent, nuisance, illegal use of premise, locking out the owner, etc.).

Importantly, foreclosing lenders must give notice (posted in the building, via US mail AND “slid under the door of each unit”) of the foreclosure, with contact/rent payment information and disclosure of the right to a court hearing before eviction.  Also, a foreclosing lender must allow 30 days following this notice to evict, even if for “just cause,” unless that “just cause” is nuisance, illegal use of premise, or owner lock-out, in which case eviction is available immediately following notice.

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