Would you assume the risk in the following situation?
A mortgage is recorded with a legal description for land that the mortgagor does not own. The mortgage shows the street address and tax identifier for land that the mortgagor does own within the text of the mortgage.
The county recorder indexes the mortgage under the name of the mortgagor and the lot and subdivision shown on the legal description. An expert witness testifies that the mortgage is not in the chain of title for the property owned by the mortgagor and, as a title examiner, he would not read the mortgage to see if there was potentially a lien on the mortgagor’s land, based upon the recorder’s index. Thus, he would exclude it from his title report.
In Kellner v. First Ohio Banc & Lending, Inc.(In re Geraci), No. 11-bk-31590, Adv. No. 11-ap-3386 (Bankr. S.D. Ohio 2014)(appeal pending), the court agreed with the expert and found that the mortgage did not provide constructive notice to a bankruptcy trustee.
The court did not follow the Sixth Circuit decision in Argent Mortgage Company v. Drown (In re Bunn), 578 F. 3d 487(6th Cir. 2011) where the court held that Ohio mortgages do not require formal legal descriptions so that if a purchaser would reasonably conclude from information contained in the mortgage what property was being encumbered, the purchaser was on notice.
Upon questioning, the expert testified that he would risk a claim on his title insurance policy over showing the mortgage. As a title examiner/underwriter, do you agree with the expert?
Cast your vote.
Amelia A. Bower is a member of the firm’s Title Insurance Law Practice Group.
Ms. Bower maintains a multi-state practice in Illinois and Ohio where she represents clients in the areas of title insurance litigation, underwriting ...
Add a comment
SubscribeRSS Plunkett Cooney LinkedIn Page Plunkett Cooney Twitter Page Plunkett Cooney Facebook Page
- Commercial Real Estate
- Real Estate Mortgages
- Real Estate
- Commercial Loans
- Business Risk Management
- Title Insurance
- Commercial Liability
- Commercial Leasing
- Fraud Activity
- Residential Liability
- Mortgage Foreclosure
- Cyber Attack
- Letter of Intent
- Construction Liens
- Mineral Rights
- Murky Days Ahead for Real Estate, Title Insurance Industries During COVID-19 Era
- Redemption is Redemption is Redemption
- The Emerging Landlord and Cannabis Tenant Relationship – A Starting Point for Michigan Landlords
- Enforcing an Unsigned Guaranty – the Leading Object Rule
- Title Curative Treatment Tops Firm’s List of FAQs
- The Text That Did Not Bark
- Does a Borrower’s Spouse Need to Sign a Commercial Mortgage in Ohio?
- Proceed With Caution When Considering CMBS Loans
- Delinquent Taxpayer Beware: A Deal May Not Be A Deal
- Could Time-Barred Debts Secured by Mortgages Rise from the Grave?