17 Accord Park Drive, Suite 106, Norwell MA 02061

Issues Continue to Surround Registered Land

In the case ofIn Re: Safina N. Mbazira, the United States Bankruptcy Court for the District of Massachusetts ruled that a mortgage encumbering registered land whose Certificate of Acknowledgment omitted the mortgagor’s name, but which mortgage was accepted by the Land Court for registration and is noted on the Certificate of Title, does not provide constructive knowledge to third parties.

In a previous article in REBA News, I discussed the case of In Re: Giroux and In Re: Bower which dealt with a similar issue for a mortgage on the recorded side. The Registered Mortgage which ran to Mortgage Electronic Registration Systems, Inc., was filed with the Middlesex County (Southern District) Registry District of the Land Court on July 26,2005. The acknowledgment omitted the name of the acknowledging party as well as the name of the county and the year of the acknowledgment. As is frequently the case, the notary failed to cross out any of the “he/she/they” alternatives.

In the Safina case, the Bankruptcy Court held that a mortgage with a defective acknowledgment should not have been accepted for recordation under M.G.L. c. 183, § 29 and, as it should have not been accepted for filing, it does not provide notice to third parties under M.G.L. c. 185, § 58. The Bankruptcy Court further held that the fact the mortgage appears on the Memorandum of Encumbrances does not change the result and determined that the language in the first paragraph of M.G.L. c. 185, § 46 must be read together with the language in M.G.L. c. 185, § 58. This case provides a further chink in the armor of registered land. As in the case of In Re: Giroux, where improperly executed Assignments were determined to be invalid, here an improperly acknowledged Mortgage, in the original amount of $528,000.00, was found to be ineffective against third parties. The dual lessons are clear: First, that you must be very careful reviewing acknowledgments of all instruments prior to recording or filing and, secondly, that

you should be reviewing documents that have been accepted for filing on the registered side with the understanding that if they are improperly executed or acknowledged, they may be found to be invalid despite the fact that they have been accepted for filing and appear on the Memorandum of Encumbrances attached to the Certificate of Title.

In another matter relating to Registered Land, I have been alerted to an S-Petition case that was filed and allowed in 2012. The S-Petition sought to add a Mortgage onto a current Certificate of Title which Mortgage was not brought forward onto the current Certificate “through mistake or inadvertence”.

The current owner has held title since 1987. The Mortgage in question was executed on July 29, 1985 and was due and payable on August 1,2015. The transfer from the Mortgagors to the current owner was for good consideration. There is no note on the Deed that the property was being conveyed subject to the Mortgage.

The current owner did not finance the property when it was purchased. The only Mortgage she has filed since taking title is a Future Advance Mortgage in 2008. Presumably, they did not find the Mortgage in question at the time of closing.

I am not certain of the effect of this matter upon practice by conveyancers and title examiners. If, as a matter of course, you cannot rely on the accuracy of a Certificate of Title, we need to seriously consider title examination practices. But it is clear that instruments recorded on the current Certificate of Title beginning with the deed into current owner should be reviewed to determine that they have been properly executed. You cannot rely on the fact that instruments have been accepted for filing.