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A recent decision from the Massachusetts Supreme Judicial Court (“SJC”) expands the scope of the Housing Court’s jurisdiction in post-foreclosure summary process eviction actions. In Bank of America, N.A. v. Rosa, No. 11330, slip op. (Mass. December 18, 2013), the SJC held that a defendant homeowner may raise certain defenses and counterclaims previously only available in Superior Court that challenge the plaintiff’s title in a post-foreclosure summary process action. The practical result is that the Housing Court now has the power to enjoin or set aside a foreclosure sale for reasons other than a lender’s failure to “strictly comply” with the power of sale in a mortgage, and may award damages to a defendant based on counterclaims raised by the defendant.

Rosa involved several residential foreclosure cases in which the plaintiff banks acquired title after exercising the power of sale contained in the mortgages. The banks then commenced summary process actions in the Housing Court to remove the homeowners from the properties. The homeowners raised various defenses and counterclaims to the banks’ actions, including allegations of discrimination and claims that the banks had violated M.G.L. c. 93A, the Massachusetts consumer protection statute (“Chapter 93A”). The homeowners also alleged that the banks did not acquire title “strictly” according to the power of sale contained in the mortgages. The SJC had previously held that the latter defense was available in an action in the Housing Court, but the banks argued that the other defenses and counterclaims were beyond the Housing Court’s jurisdiction.

On appeal, the SJC held that although the jurisdiction of the Housing Court is limited, its jurisdiction encompasses granting equitable relief (such as enjoining or reopening a foreclosure sale) where a defendant has raised an equitable defense to the plaintiff’s title. The SJC also held that the Housing Court may consider defenses and counterclaims based on Chapter 93A and the state’s anti-discrimination statute, M.G.L. c. 151B, provided such defenses and counterclaims challenge the plaintiff’s title or possession. The Housing Court may award damages in conjunction with such counterclaims.

Although SJC did not expressly limit its holding to mortgages on residential properties, the Housing Court’s jurisdiction generally does not encompass purely commercial cases. Additionally, many of the types of defenses and counterclaims considered in Rosa are already available in Superior Court and the state District Court, where most commercial summary process actions will commence. Therefore, it is likely that the Rosa decision will primarily affect foreclosures of residential properties.

This advisory was prepared by Beth H. Mitchell and Gregory R. Bradford of the Commercial Finance practice group at Nutter McClennen & Fish LLP. For more information, please contact Beth or your Nutter attorney at 617.439.2000.

This advisory is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.