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Massachusetts Agencies

Entry: Discharge

Foreclosure

The case of Goff v. White, 37 Mass.App.Ct. 128, 636 N.E.2d 1369 (1994) addresses the question of the effect of a discharge of a mortgage three years after the entry has been made. Ordinarily, after the expiration of three years the entry ripens into title in the mortgagee (or its assignee), and thereby requiring a deed from the mortgagee to pass title, but in Goff the Appeals Court concluded that a discharge given by Bristol County Savings Bank more than three years after the bank had made an entry under a mortgage would effectively put the title back into the mortgagor, and that a subsequent deed from the bank to a third party "bounty hunter" would pass no title, as the bank had none to give at that time. The Court mentioned at least three reasons for its decision:

  1. The bank, after the three-year period had expired, had given the borrower partial releases of the mortgage on other parcels which demonstrated that the bank never intended for the possession under the entry to ripen into title. Citing Montuori v. Bailen, 290 Mass. 72, 194, N.E. 714 (1935), the Court said that "a formal foreclosure of an equity of redemption by possession and the lapse of time does not prevent redemption . . . where the true understanding is that the right to redeem shall nevertheless continue to exist."
  2. The subsequent purchaser from the bank was not a bona fide purchaser for value.
  3. The applicable statute, now contained in G.L.c. 183, §54, provided that "such [discharge] shall have the same effect as a deed of release."

The Appeals Court in Goff discussed the applicable statute in reference to the fact that "anyone claiming through [the bank] thereafter would be on record notice not only of the language of the releases, importing a continuing security interest,[1] but also of the mortgage releasing effect of the marginal notation of the discharge." The court seems to suggest that the language in the statute that "the [discharge] shall have the same effect as a deed of release" is not dispositive to the case, but rather supplements the significance of the effect of the partial releases.

1 The court noted that the partial releases stated they "shall not in any way affect or impair the right of [the bank] to hold under staid mortgage and as security for the sum remaining due but also of the mortgage releasing effect of the marginal notation of the discharge."