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Registered Land is Human Too

Two recent cases should cause conveyancers to view registered land in a slightly different light. In the first case, Sullivan v. Kondaur, a clearly defective Assignment, accepted for registration, was challenged by the Mortgagors and found to be deficient resulting in the subsequent foreclosure being void.

In the second case, Martin v. Simmons Properties, LLC, an easement shown on a Land Court Plan between two registered owners was found to be subject to the Restatement which entitles the owner to the servient estate to make reasonable changes in the location or dimensions of an easement.

Massachusetts Appeals Court Case No. 13-P-706, a 2006 Mortgage from the Sullivans to Mortgage Electronic Registration Systems, Inc., was foreclosed in 2009.

The Mortgage covered registered land and was assigned twice; the first Assignment from Mortgage Electronic Registrations Systems, Inc., as Nominee for WMC Mortgage Corp. to Saxon Mortgage Services, Inc. was dated May 21, 2008 and filed with said Registry District as Document No. 1092434. The Sullivans challenged this Assignment claiming that MERS’ interest in the Mortgage was “inherently invalid because it separated from the ownership of the underlying debt.” The Court acknowledged that though a foreclosing mortgagee must demonstrate an unbroken chain of assignments in order to foreclose a mortgage (Ibanez), it must also demonstrate that it holds the note or acts as authorized agent for the noteholder at the time it commences foreclosure. However, nothing in Massachusetts law requires a foreclosing mortgagee to demonstrate that prior owners of the record legal interest in the mortgage also held the note each time it assigned its interest in the mortgage to the next holder in the chain.

The second Assignment from Saxon Mortgage Services, Inc. to Kondaur Capital Corporation. It was dated February 12,2009, and filed with said Registry District as Document No. 1107431. This Assignment was executed for Saxon Mortgage Services, Inc. by Natalie Flowers. There was no designation of her office or other capacity next to her signature. In addition, the paragraph preceding the execution read, “In witness whereof, Mortgage Electronic Registration Systems, Inc., as Nominee for WMC Mortgage Corp. has caused these presents to be signed by its duly authorized officer and its corporate seal to be hereunto affixed, this 12 day of December 2009.” This clause was copied from the prior Assignment.

In addition, the acknowledgment is by Natalie Flowers, individually. The acknowledgment and execution are clearly defective.

The Court notes that the only reference to the status of the individual signatory in the second Assignment, Natalie Flowers, as an Officer of any kind of any entity is in the paragraph immediately preceding the signature block which recites that MERS has caused these presents to be signed by its duly authorized officer.

Concerning the acknowledgment, the Court notes “nor can the notarial acknowledgment supply the missing evidence; it merely recited that Flowers acknowledged that she executed the Assignment ‘in (her) duly authorized capacity’ without describing what that capacity might be, or with whom.”

Kondaur further asserted that the Sullivans could not challenge the validity of its title by virtue of the issuance of a Transfer Certificate of Title in its name prior to the commencement of the action.

The Court notes that although the underlying purchase oftitle registration is to protect the transferee of a registered title, M.G.L. c. 185, §114 authorizes any registered owner or other person in interest to bring a Motion to Correct the Certificate of Title upon various grounds including “that any error or omission was made in entering a certificate or any memorandum thereof’ provided that “nothing shall be done or ordered by the Court which shall impair the title or other interest of a purchaser holding a certificate for value and in good faith.”

The Court concluded that in this case, they are not dealing with an innocent third party as the foreclosing mortgagee, Kondaur, was required to establish its title to the Mortgage by reference to instruments of assignment transferring the Mortgage to it following the Sullivans’ conveyance of the Mortgage to MERS in the first instance.

In the case of Clifford J. Martin v. Simmons Properties, LLC, 461 Mass. I, the Supreme Judicial Court confirmed a Land Court Decision that certain encroachments into an easement defined by reference to a Land Court Plan did not interfere with the easement holder’s rights to passage over the easement in that the encroachments did not lessen the easement’s utility for passage by vehicles much larger than any in existence at the creation of the easement, did not increase the burden on the Plaintiff in his use of it, and did not frustrate the purpose of travel to the Plaintiffs lot.

The Plaintiff, Clifford J. Martin, was the owner of property designated at Lot 3A on Land Court Plan 6199J. According to the Certificate of Title, Lot 3A is “subject to and has the benefit of’ various easements, including an easement for travel over Lots 4A, 10 and 12 as shown on said Plan as “Way A”.

The owner of Lots 4A, 10 and 12, Simmons Properties, LLC made a number of alterations to the parcels which to some extent protrude into Way A.

In M.P.M. Builders, the Supreme Judicial Court adopted Section 4.8 (3) of the Restatement (Third) of Property Servitudes which provides, “Unless expressly denied by the terms of an easement, as defined in §1.2, the owner of the servient estate is entitled to make reasonable changes in the location or dimensions of an easement, at the servient owner’s expense, to permit normal use or development ofthe servient estate, but only if the changes do not (a) significantly lessen the utility of the easement, (b) increase the burdens on the owner of the easement in its use and enjoyment, or (c) frustrate the purpose for which the easement was created.”

The Decision includes an extensive discussion ofthe expansion of M.P.M. Builders to registered land. The Court notes that there is nothing in the Land Registration Act to support a different understanding ofthe Law of Easements concerning registered land as opposed to recorded land and emphasizes the importance ofpublic policy favoring productive use of land and in the resolution of conflicts among the parties to servitudes.