Whitfield Bryson & Mason
is making news.

Federal Judge Allows Deed Recorders’ Case to Move Forward

A Pennsylvania federal judge has ruled in favor of a WBM class action suit, finding that a statute requiring the registration of deeds is constitutional. The Recorder of Deeds for Montgomery County, Pa., on behalf of herself and and the recording clerks of all Pennsylvania counties had sued Mortgage Electronic Registration Systems Inc. (MERS), alleging that the company violated the law by using a separate system.  U.S. District Court Judge J. Curtis Joyner’s April 21 ruling keeps the suit alive.

In Montgomery County, Pa., Recorder of Deeds v. MERSCORP Inc. et al., the judge rejected MERS’ claims that state law — which requires it to record all mortgage assignments with county deed offices and to pay the associated recording fees — was unconstitutionally vague.

Montgomery County deed recorder Nancy Becker had filed suit in November 2011, alleging that MERS, by using an electronic system that bypasses the filing process at a recorder or registry of deeds office, was depriving deed recorders of the money they should have received. MERSCORP, which owns the electronic system that runs the registry, also was named in the suit. Pennsylvania’s 67 counties are certified as a class.

Joyner said he found nothing vague about the law. “The standard is very simple: If the holder of an interest in land wishes to protect and maintain that interest, it must record the document by which that interest is memorialized. We find nothing vague about it,” he said in the opinion.

He said the statute is clear in that it is the lender's responsibility to record the deed within the county office of the recorder of deeds.

“Because mortgages are recorded to provide notice to the entire world of the person or entity who encumbers title to the property and the failure to timely record a mortgage and/or mortgage assignment could impact the validity and/or priority of the mortgage as against subsequent purchasers or mortgagees for valid consideration, common sense suggests that it would be in the mortgagee’s best interest to record so as to ensure that its interests are properly protected,” Joyner said in his opinion.

"Because Judge Joyner previously held that recording of mortgage assignments is mandatory in Pennsylvania, we are increasingly confident that MERS will ultimately be held liable for unpaid recording fees in Pennsylvania,"
said WBM partner Gary E. Mason, who represents plaintiffs in the case.

Motions for summary judgment on other matters in the case are pending.