A man who bought a house that turned out to be an invalid foreclosure cannot sue the previous homeowner over his clouded title because the bank foreclosed before receiving an actual mortgage assignment, the Massachusetts Supreme Judicial Court said Tuesday.

Vincent Valvo, group publisher and Editor-in-Chief for Massachusetts real estate data firm The Warren Group, says the case is a "massive holding" that will have a deep effect on the real estate market.

"Basically, the Supreme Judicial Court took all of these nice and neat housing sales that have happened under the umbrella of a foreclosure action and stuffed them in a blender and pureed them," Valvo said. "There is no title or very few titles that have passed under a foreclosure action in Massachusetts that are not now under some draconian threat of being made insubstantial."

The court's conclusion involves the controversial Bevilacqua v. Rodriguez case. The case pits the rights of Bevilacqua, a third-party who acquired the title in good faith, against the procedural and legal safeguards surrounding the foreclosure process that protects parties from wrongful foreclosures.

The main party to the case, Francis Bevilacqua III, acquired his home by quit-claim deed from U.S. Bank as trustee and holder of the note in October 2006. A quit claim deed allows a property owner to transfer his or her ownership in the property to another party.

But in this case, U.S. Bank didn't actually have title to the property when it transferred it to Bevilacqua.

U.S. Bank initiated a foreclosure on the home's previous owner without receiving an official mortgage assignment from the Mortgage Electronic Registration Systems. Without MERS delivering the assignment to U.S. Bank before the foreclosure actions, the defendants claim the bank never had authority to deed the property to Bevilacqua, making him unqualified to try title.

The Massachusetts Supreme Court was asked to determine "whether a person who holds title to property by virtue of a recorded deed, but whose title is clouded by a possible adverse claim due to deficiencies from a prior foreclosure in his chain of title, has standing to try title," according to briefs filed in the case.

In its final opinion, the Massachusetts Supreme Judicial Court cited precedent from another major case, U.S. Bank National Association v. Ibanez. The court wrote: "One of the terms of the power of sale that must be strictly adhered to is the restriction on who is entitled to foreclose." The court added, "In light of its defective title, the intention of U.S. Bank to transfer the property to Bevilacqua is irrelevant and he cannot have become the owner of the property pursuant to the quitclaim deed."

The Warren Group's Valvo said the ruling is significant when looking at the number of foreclosures that have already passed in the state.

"The court just said you might be able to go back and re-foreclose (on the property) and prove title, but you do not have clear title now," he explained when describing the new homeowner's dilemma. "The issue for a homeowner is having to prove that a foreclosing entity had the right to foreclosure. But if I am someone who has bought a foreclosure, I now cannot sell my home until I can prove that the foreclosing entity had that right of foreclosure, which might be difficult for me to prove."

Write to Kerri Panchuk.