Last month the Supreme Judicial Court (SJC) decided Federal National Mortgage Association v. Nunez (pdf). We discussed the oral argument of that appeal in this earlier post.
Nunez concerned a summary process (i.e. eviction) action filed by Fannie Mae against a tenant living in a foreclosed residential property. That action was pending, but not completed, before the effective date of M.G.L. c. 186A. That statute contains new requirements for evictions by foreclosing parties – including that such evictions be “for cause” in certain circumstances. The focus of the case was the impact of this new legislation on the pending case.
Nunez repeated the general rule that a statute is prospective unless it’s clear that the Legislature intended it to operate retrospectively. Nevertheless, the SJC managed to reach a result that protected the tenant by carefully parsing the definition of “eviction” in section 1 of Chapter 186A. The court said, “an ‘eviction’ includes, ‘without limitation,’ any ‘action’ ‘intended to actually or constructively evict a tenant or otherwise compel a tenant to vacate.’ . . . [I]t is clear that the Legislature did not limit an ‘action’ in c. 186A to a legal action.”
Having clarified the definition of “action,” the SJC held that “the prohibition against evictions without cause in G.L. c. 186A, § 2, is prospective in that it does not apply to acts of eviction committed by a foreclosing owner before August 7, 2010 [the statute’s effective date], but does apply to acts of eviction committed after that effective date.” (emphasis added; footnote omitted). The court then considered whether applying Chapter 186A to a home that was foreclosed on before the statute’s effective date would constitute an improper retroactive application of the new law. The court decided that the narrow application of the statute to a foreclosing owner avoided this result, because the owner may evict without cause once a purchase and sale agreement has been signed to sell the unit to a bona fide purchaser:
We conclude that a modest reduction in the value of a real estate asset arising from the limitation on Fannie Mae’s ability to evict tenants is not the sort of burden that is so unfair as to render c. 186A retroactive in effect. Rather, like a new property tax, zoning regulation, or other “uncontroversially prospective statutes,” c. 186A, at worst, simply “may upset the reasonable expectations that prompted those affected to acquire property.”
Because this ruling put the kibosh on Fannie Mae taking the “action” necessary to complete its eviction proceeding, the SJC held that the Housing Court had correctly dismissed the case.
Although the Nunez decision will affect only a limited number of cases, it’s another example of the SJC’s inclination to construe statutes to protect individuals caught up in the ongoing foreclosure crisis.